Harry Wallop states the obvious and misses the elephant in the room! If - as he says - we have very little manufacturing base to expand our economy from it is surely the height of lunacy to cripple the one asset we have lived off for years - our financial services.
It is these that are so hemmed around with socialist ideas that they are not lending to the businesses that could become - NO! would become - the manufacturers of the future. The government (see Northern Rock, Bradford & Bingley and the ruination of Lloyds-TSB by its forced merger with HBOS , ALL government blunders) have produced paralysis in the financing of our economy.
The same government that has presided over this wreck now wants to tie up all the genius of our world-class financiers by kow-towing to EU demands and supervising the closing down of the City of London as the world’s leading financial centre. This has been engineered by the 70-year old revenge of the Germans for beating them in two wars and the even more vicious revenge of the French for our rescue of them against their will from Nazi Europe and shaming them for their cowardice in joining it.
But after Tarzan-type noises from Brown, yesterday e caved in and surrendered all that he had said he stood for to the self-same Franco-German axis.
Christina
TELEGRAPH 4.9.09
UK recession: Why are we lagging our neighbours?
The OECD has predicted that Britain will be the last major economy to exit the recession. Harry Wallop explains why we are being left behind by France, Germany and the rest.
By Harry Wallop, Consumer Affairs Editor
Can Britain suffer any further economic humiliation? Just as Alistair Darling prepares to welcome his fellow finance ministers from around the world to London, the OECD predicts that Britain will be the last major economy to exit the recession.
Forget the Chancellor's bold promise of a return to growth by the end of the year, we will have to wait until 2010 before the country's gross domestic product starts to increase. [And that’s just the very moment that we have to start paying back Darling’s vast borrowings -cs]
Before we get too despondent, it is worth pointing out that the OECD has in fact upgraded the outlook for the second half of the year for Britain, noting that our housing market is showing signs of some improvement. And many economists believe the OECD is being unnecessarily harsh on Britain.
But most agree we are not recovering nearly as fast as France, Germany – which have already finished their recessions – America or any other leading country.
There are many reasons for our sluggishness, but one sticks out.
Our economy was far too reliant on the financial services industry, which suffered the worst crisis since at least the 1930s last year. Everyone from big City banks to small mortgage brokers, have been hit hard, fuelled as they were with cheap debt and easy credit.
Even if the housing market continues to recover – and it looks like it has certainly hit the bottom – it will be a long time, if ever, before mortgage companies are able to make as much money as they did during the great property boom of the last 15 years.
And if banks are too badly bruised to start lending freely to individuals, they are being even more cautious when it comes to handing over money to businesses.
Japan and Germany, and to some extent France, have a far larger manufacturing base. They were initially stymied when factories shut down around the world at the end of last year. The economic contraction in the major car manufacturing countries was far more severe than in Britain, which has a far smaller manufacturing base than during previous recessions.
While our relatively small manufacturing base was useful at the start of the recession, it is now causing us a headache. Gross domestic product measures the total value of the goods and services in the economy. But if we aren't making anything, we can't increase our GDP. The City, which filled this hole, is still limping badly, despite all the bullish talk about the return of big bonuses.
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