Why will the UK economy be "Worst in West" (IMF prediction)

BlondeHeadOn

I hear the message, but I am still not quite sure why the UK economy is so much worse-placed then other countries to weather the downturn. I know I read this board a lot (:o ), but even so I am not quite sure of the details of what makes the UK so vulnerable.

I'm sure a lot of you can enlighten me! Please?

Lotus-eater

We've got GB innit (and everyone else in the HOC's)

No, don't know really, I was wondering this after reading the other day that someone thought that if the USA was f**ked the UK was gang f**ked.

JayScottGreenspan

We're going into this running big deficits and we have had amongst the nastiest housing and personal debt bubbles. But I think the clincher is the over-reliance of our economy on financial services.

Wookster

For a number of reasons:

- Much of UK consumption is imported meaning we do not produce very much ourselves (relative to what we consume)
- Real economic growth in the UK has been much lower than the reported rises in GDP over the last few years, masked by the fact that we have borrowed (at personal, corporate and state level) to fund spending/ consumption. This has masked the true mediocracy of the UK economy
- The UK has a poorly skilled workforce
- The UK has been overly dependant on financial services which are shrinking permanently
- The UK is a monstrously expensive place to do business
- We have a government that simply does not understand this

purch

-The UK has too many people moaning about everything, instead of doing something

Lotus-eater

purch wrote: »

-The UK has too many people moaning about everything, instead of doing something

Yeah and some of them just complain about other people complaining.

itsnever2lateisit?

Principal reason is financial services, the sector has been responsible for much of the growth in the UK over the last 10 years, and is the sector that has fallen the most recently. We do not have the diversity that other countries have, and in manufacturing it is now too small to take advantage of the devaluation of sterling

kennyboy66_2

Wookster wrote: »

For a number of reasons:

- Much of UK consumption is imported meaning we do not produce very much ourselves (relative to what we consume)

While this may be true (the imports bit), this does not contribute to making "our" recession worse.
In fact the opposite is true - in a world wide recession the more you export the worse off you will normally be as trade decreases.

- Real economic growth in the UK has been much lower than the reported rises in GDP over the last few years, masked by the fact that we have borrowed (at personal, corporate and state level) to fund spending/ consumption. This has masked the true mediocracy of the UK economy.

GDP growth is what it is, it may have been increased by borrowing (corporate), however consumer borrowing to buy imported shiny goods has no impact on GDP at all directly.

- The UK has a poorly skilled workforce - True
- The UK has been overly dependant on financial services which are shrinking permanently - true
- The UK is a monstrously expensive place to do business - compared to USA true, but not compared to Germany, France, Italy etc

- We have a government that simply does not understand this

We are likely to get less net imigration from Eastern Europe, this has certainly increased GDP.

kennyboy66_2

itsnever2lateisit? wrote: »

. We do not have the diversity that other countries have, and in manufacturing it is now too small to take advantage of the devaluation of sterling

Simply wrong.

As a proportion of our GDP we export more than the USA.

We are one of the most open economies in the world, this is not a great help in a recession.

Wookster

kennyboy66 wrote: »

We are likely to get less net imigration from Eastern Europe, this has certainly increased GDP.

This is another thing that has masked the true mediocracy of the UK workforce. Hard working Eastern Europeans.

Lotus-eater

Wookster wrote: »

This is another thing that has masked the true mediocracy of the UK workforce. Hard working Eastern Europeans.

I've worked on many many sites with UK and Eastern European workers and can honestly say, the only difference between them is that the UK workers can't afford to work for the smaller wages the EE's get.