There was a very interesting – and quite worrying – article published on the al-Jazeera website today consisting of an interview with the Economic Editors of the right-wing Mail on Sunday (Dan Atkinson) and the left-leaning Guardian (Larry Elliott) about the economic prospect facing the UK. Atkinson and Elliott have apparently collaborated on four books together and their latest one is entitled “Going South: Why Britain will have a third world economy by 2014“.
Lots of depressing bits to note, not least this paragraph:
“On the face of it, the return to recession in the winter and early spring of 2011-2012 is merely the latest expression of the British economy’s almost limitless capacity to disappoint. But we fear matters are much more serious than that. We cannot find work for all our people, and import skilled foreigners to make up the deficiencies in our own workforce. We have run a balance of payments deficit every year since 1983. Government and the public are burdened by debt. State support for the banking sector is roughly 100 per cent of GDP. The quick fixes are all used up. Near term, we fear the danger is a move from conventional recession into a long-running depression, with chronically high unemployment, falling living standards and, eventually, interruptions to energy supplies.”
Does that sound too gloomy? I went to look for more information and coincidentally found an article jointly written by Atkinson and Elliott earlier this month in the Guardian where they discuss the UK’s balance of payments deficit and it made me even more depressed! Have a read of this:
“The cotton and woollen mills are long gone, as are many of the companies in the electronics and motor vehicle sectors that flourished briefly in the 1930s and again after the second world war. The decline of British manufacturing is symbolised by the fate of Longbridge in Birmingham. At the end of the 1960s, it was the largest car plant in the world, employing 250,000 people, but after the collapse of MG Rover in 2005, most of the site was sold off for commercial and residential use. There are still a few car workers at Longbridge, but they are employed by the Shanghai Automotive Industry Corporation. The old Morris plant at Cowley, on the outskirts of Oxford, has survived and is still churning out the Minis that, along with Mary Quant dresses and the Beatles, were the symbols of the swinging 60s. The plant, though, is owned by BMW of Bavaria. It is a similar story for Jaguar and Land Rover, run by the Indian company Tata.
“Gone, too, is the oil that briefly, in the 1970s and 1980s, offered the promise of a windfall to finance industrial regeneration. The oil wells are all but dry, so Britain is no longer a beneficiary of high crude prices caused by strong demand from the emerging world and the gradual decline in production from fields where oil is cheap to extract. Oil and gas are imported from Russia and the Middle East, nuclear power stations are coming to the end of their lives and Britain has only a handful of working coalmines. The words used by Sir Edward Grey in 1914 now have a more literal meaning: the lights are about to go out.
“In the hundred years from 1914 to 2014, the century since the outbreak of the first world war, the UK will have declined from pre-eminent global superpower to developing country, or “emerging market”. The symptoms of this vertiginous plunge in the world’s rankings are already starkly apparent: a chronic balance of payments deficit, a looming shortage of energy and food, a dysfunctional labour market, volatility in economic growth and a painful vulnerability to external events.
“Since the start of the crisis, the UK has borrowed more in seven years than in all its previous history. It has impoverished savers by pegging the bank rate well below the level of inflation, and indulged in the sort of money-creation policies normally associated with Germany in 1923, Latin American banana republics in the 1970s and, more latterly, Robert Mugabe’s Zimbabwe.
“Then there is the large number of unproductive workers engaged in supervisory or “security” roles, on the streets, in public parks, on the railways and at airports. There are the wars fought without the proper resources to do so, and the awareness among military commanders that, in the absence of any military conflict, their forces will be shrunk further, there being no attempt objectively to assess the nation’s enduring defence needs. There is the ramshackle infrastructure existing in parallel with procurement contracts that run billions of pounds over budget and are then cancelled.
“If these are the big indicators of imminent relegation, the smaller ones are too numerous fully to catalogue. Thus the UK government has unveiled a “tourism strategy”, in the manner beloved of developing countries the world over, and the annual allocation of places at state schools has disclosed such an enormous shortage that the authorities have resorted to lotteries and other forms of rationing, rather like the “rolling blackouts” seen in post-colonial countries that have allowed their power stations to decay.
“On 21 March, chancellor George Osborne, in his Budget speech, acknowledged that the UK was now in competition not with Germany or the US but with emerging economies: “Do we watch as the Brazils and the Chinas and the Indias of this world power ahead of us in the global economy; or do we have the national resolve to say: ‘No, we won’t be left behind. We want to be out in front’?”
“Elsewhere in his speech, he made this telling aside: “[We are] working to develop London as a new offshore market for the Chinese currency.””