The UK economy

3rd June 2011

In the Daily Telegraph Philip Aldrick says that the UK slowdown is a harsh reminder of the importance of demand, and how this must be tackled. "Without demand, suppliers won't produce. As suppliers cut back, jobs are lost. As jobs are lost, demand falls further. A demand failure can trigger a dangerous downward spiral.

He adds: "Much of the Government's reforms, though, have been focused on the supply-side of the economy. Improving tax breaks for business, reducing the cost of employment, reforming planning to make life easier for developers, re-energising regional development authorities, protecting skills and education. Vital as those reforms are, the lack of demand-side initiatives is now coming home to roost."


Commenting on Larry Elliott's report in the Guardian on the slowdown in the UK serves sector Paul from Yorkshire comments: "I agree that the economy needs rebalancing, but the trouble is it's currently falling over.

"Manufacturing is an excellent example. The UK needs to manufacture more (I have always believed this)…Domestic markets have stagnated and manufacturers are back in trouble."


Damian Reece says in the Daily Telegraph that the coalition has to work with businesses, not against it, to aid recovery 

He writes: "Rather than ease up on public spending restraints, George Osborne needs to redouble efforts to unleash growth. In this area, however, the Coalition has been peculiarly pedestrian.

He adds: "The Coalition has to get serious about red tape, especially for new businesses looking to hire people. Local councils, health and safety officials and the legion of other regulators still view as suspicious people trying to make money through private enterprise.

"Corporation tax is coming down but a commitment to further, longer term cuts should be made, likewise with the 50p top rate of tax."

Downtime comments: "Serious home grown investment in the UK? Machines, ideas, apprenticeships, training? According to some who have looked, that has not been the case (in general, excluding some very successful companies) for a century, compared to some other countries.


Hamish McRae in The Independent suggests that Asia could rescue the UK – and world – economy. He says: "Could the emerging world save the developed world again? The past few days have seen a new shudder run through the financial markets, with rising fears of a pause in US growth, maybe even a double-dip to the recession.

He adds: "Viewed from Asia the problem is much more how to slow things enough but not too much. Assuming that the region achieves this transition, that could be really helpful to the rest of us. We need continued growth, but a somewhat slower pace would take pressure off commodity, food and energy prices."


A Citywire blog agrees that China could yet prove the engine that sustains the recovery in the Western world, according to Dr Linda Yueh, director of the China Growth Centre and fellow at Oxford University.


A poll in the Guardian titled UK economic gloom: is the pessimism justified? Shows that 70% of us believe there's every reason to be gloomy. The pressure of falling real incomes, a stagnant housing market and stubbornly high unemployment is taking its toll.


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