UK has a decade of economic pain ahead, warns leading economic forecaster

Tuesday, January 19th 2010 - 13:35 UTC

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UK economy needs to change from borrow-and-spend to more export-driven

The UK faces a decade of economic pain after years of splurging on credit, a leading economic forecaster has warned. The Ernst & Young ITEM Club said the economy faced stagnation unless exports received a boost.

And the forecaster warned there would be little growth in what would be a “challenging year” ahead. Official figures due later this month should confirm an end to recession in the final three months of 2009.

But the emergence does not mean Britain is revelling in stronger economic activity.

Several initiatives, such as the car scrappage scheme, have propped up spending.

Chief economic adviser Peter Spencer predicted growth of around 1% this year.

“Once the effects of these temporary stimuli have worn off, it is difficult to see where the growth is going to come from in the short term,” he said.

“Unless the wider recovery turns out to be significantly stronger than we anticipate some further increases in unemployment are still likely in the coming months - prolonging consumer caution.”

He said Britain's economy needed to change from borrow-and-spend to being more export-driven.

“It is vital the UK rejuvenates its overseas investment model and starts selling into countries such as China, where we have an exceptionally low market share compared to our leading competitors,” he said.

“We are no longer in a position to borrow - the massive debts that we racked up in the last decade now need to be repaid.

”With banks and consumers deleveraging, no scope for further relaxation of monetary policy and the Government in retrenchment mode, the UK's only hope of significant growth is a rebound in overseas exports and income - as well as inward investment.

Categories: Economy, International.

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geo
UQ 's GDP : 1.9 trillions Euro
it 's international investment position :

OUTPUTS :
direct investments : 1.050 trillions £
portfolios : 1.900 trillions £
debts : 1.220 trillions £
other : 3.600 trillions £

INPUTS :
direct investments : 0.680 trillion £
portfolio : 2.300 trillions £
debts : 1.600 trillions £
other : 3.700 trillions £
Jan 19th, 2010 - 07:16 pm 0
geo
Germany : GDP 3.750 trillions Euro
it's international investment position :

OUTPUT:
direct investment : 0.950 trillion Euro
portfolio : 1.700 trillions Euro
debts : 2.000 trillions Euro
others : ---

INPUTS
direct investments : 0.690 trillion Euro
portfolio : 1.300 trillions Euro
debts : 0.600 trillions Euro
others : --
Jan 19th, 2010 - 08:09 pm 0
geo
France GDP : 2.500 trillions Euro
it's international investment position :

OUTPUTS :
direct investment : 0.940 trillion Euro
portfolio : 1.820 trillions Euro
debts : 1.500 trillions Euro
others : 1.360 trillions Euro

INPUTS :
direct investments : 0.800 trillion Euro
portfolio : 2.000 trillions Euro
debts : 1.500 trillions Euro
others : 1.800 trillions Euro
Jan 19th, 2010 - 08:18 pm 0

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