UK slowdown worst amongst advanced nations - but why

[LadyMuck]

IMF seems to view that the UK economy will shrink more than the Eurozone or the US this year. Why is it looking so bad in comparison with these 2? Any economists out there?

Because we are a small island who has had huge immigration and don't have enough nationals paying tax and NI to support all those in need due to unemployment etc etc.

because we have bought way too much shit

waaaaaay more than anyone else in the world

check out an ordinary couple with ordinary jobs and the amount of poncey appliances/furniture/cars etc on HP/credit cards.

We spent ridiculous amounts on property and rubbish imported goods. Our industrial sector is small. Our major sector of the economy is financial services (remember "invisible exports") and this sector has gone down through lack of regulation. Nothing to do with immigration or other racist/DM nonsense.

Who said anything racist ? We now have mass unemployment and how are we going to support those people ?
I think we should be ashamed we have Polish people sleeping under bridges, we opened the doors to them we should damned well look after them now, how I don't know but that's why we'll suffer more because we have a bigger population than the UK can support.

Well I've now read the IMF update and I'm still not much the wiser, other than they think that we will just be back to minimal grwoth in 2010.

I have to agree that the unusually high levels of personal debt in this country is a major factor.

remember that statistics are tricky things to bandy about - an economy shrinking more than another doesn't necessarily mean that it becomes a smaller economy - the US could shrink by a larger rate in % terms than Luxembourg, but it wouldn't make the US an economic minnow

i don't think there's any nation besides Japan that has such a huge housing bubble, tbh.

Agreed, but specifically the UK is compared with "similar" nations, and is contracting faster. Is personal debt really an inhibitor to economic growth? Or is this more to do with the finanical services industry, in which case I can't see why there would be any sort of recovery in 2010?

Recessions are never down to just one factor.

You've also got a government who continues to try to keep the housing bubble from being pricked and who has now punished savers extremely with interest rate cut after interest rate cut.

Trouble is, now the savers don't have the money to spend anymore and nor has anyone else.

And if they do, they mostly aren't spending it.

Ah Vince Cable says "With a bigger slowdown expected here than in both Europe and America, this report exposes Gordon Brown's lie that Britain is well placed to deal with the recession.

"The prime minister likes to pretend that Britain is simply the victim of a global crisis, but many of the UK's problems are clearly home grown.

"Huge levels of personal debt and an over reliance on the financial sector has made this country particularly vulnerable."

Well I don't think the VAT cut has solved it!

The majority of most peoples' personal debt is in the form of mortgage.

look at Ireland and Spain for housing bubbles, too - much of Spain's economic boom was built on housing and enormous construction projects, now crashing, not least because lots of second home-owners from overseas are changing their minds

According to Jim Rogers (he apparently co-founded a major fund with George Soros), the UK is in such bad shape because "the UK has nothing to sell".

He reckons that the two main pillars of support for sterling have been North Sea oil and the strength of the UK financial services sector, in particular, the City of London?s role... and just as North Sea oil is running out, so London?s standing as a major financial centre is set to suffer. He went on to say in the FT interview ?I don?t think there is a sound UK bank now, at least, if there is one I don?t know about it...The City of London is finished."

I scared myself silly reading the online article in the FT...

I hope the City isn't finished as beyond the banks there are many other sectors - insurance (and shipping) legal services etc which, whatever you may think of them, do employ a large number of people.
We had a bonanza with the North Sea gas and then burnt it all up in gas fired power stations to produce electricity. No forward thinking there.

A factor might be what proportion of those with jobs actually make or provide something. Though perhaps the other countries are just as bad in that respect.
Part of our problem will be the number of people whose job consists of making sure someone else is doing theirs or makework jobs that are no better than being unemployed (for the economy that is. It's better for them to get a nice wage for meaningless paperwork)

• High unsecured debt for many individuals eg students/ shopaholics
• Over inflated property prices
• Buy now pay in the future policies of government eg private finance initiatives
• imprudent handling of economy during previous better times
• no oil left in the North Sea
• Gordon Brown has thrown so much money at the problem - largely ineffectually eg VAT that we will be paying it back forever

I'm not an economist, but, as Lilymaid said, I reckon that one big problem for the UK is its very small industrial sector.

I hope the City isn't finished either, Lilymaid! I agree that there are many non-bank industries in the City but much of their success is dependent on/tied to the success of the banks (including the sectors you mention such as insurance and legal).

Sorrento, your post is so ignorant.

In the UK, manufacturing has declined substantially compared to comparable nations like Germany, France and Japan.

We have an over-reliance on a large financial sector, large parts of which are a zero sum game, i.e in order for someone to prosper, someone has to lose.

Personal debt is too high.

Property prices are over-inflated.

We also have a large service sector which is reliant on people having money to spend and in the current climate, that is not happening so that sector will shrink too.

One of the things that will help the UK is more investment in science, technology and design which will underpin emerging sectors like the green economy. We have the skills and intelligence to be trailblazers in emerging as well as established industries, we just need to have the tenacity, prescience and inspirational leadership which is lacking in so many industries. We also need a government that will have the courage and conviction to invest in the long term and not be railroaded by populist, knee-jerk opinions.

Sorrento - are a troll from the BNP! Your post is one of the most ignorant I've ever read on MN.

I live in Ireland and our housing bubble was way bigger than that in the UK expat.
Lots of sad faces here.

I agree spokette - we need investment and courage now.
It's sort of exciting I feel - time for change.

Absolutely agree, spokette.

Great post spokette!

Er I am not a troll and I will express my views as freely as I damn well like.

Spokette, a whole BTL industry has been built on two factors the fact that we can cram immigrants into shitty conditions that we would not accept ourselves and make money from them and that student would need housing because many many more were attending university.
Both have had the rug pulled out from under them as students cannot afford to live away from home and the immigrants cannot find work now the construction industry has gone tits up.
I for one will laugh as loud as I can when I see the baby boomers who have snapped up all the traditional first time buyers homes and rented them out loose their money, homes are for living in not for pensions.
I am not a BNP send them all home type at all, we brought them here we need to provide for them, but we should also learn a lesson, we do not need to import labour into this country we need to kick people up the arses when times are good and say somebody needs to sweep the streets and you aren't too good to do it.