British economy suffering slumps: Voice of Russia

In their quarterly forecast for the British economy both the BCC and the CBI say that the UK?s economy will contract by 0.4% in 2012 rather than grow by 0.1%, as previously predicted. And next year, they say, the economy will grow by just 1.2% rather than the 1.9% the government was hoping for. The business groups are urging the government to implement an infrastructure program to provide some dynamism and growth to the UK?s stagnant economy. In the blunt assessment of the impact that the coalition has had on taking the country out of recession, the BCC?s Director General John Longworth said, ?Politicians need to show some backbone and leadership when it comes to the economy.?

?There are only 150 MPs out of 650 that have ever been in business. And only 30 have got any qualifications in science. We?ve now got a political class that?s divorced from the reality of business and economics. It is important across all the political parties to show leadership, bold action and some imagination on how to stimulate growth. And they?ll actually get back in contact with the real economy.?

The BCC which represents over a 100,000 British firms admits that many factors are hampering the government?s recovery strategy, among them the Eurozone debt crisis, increasing commodity prices and low business investments. It says that businesses need an enterprise-friendly government with bold policies if they are to drive the country?s economic revival. Michael White is the Assistant Editor at the Guardian Newspaper:

?The British Chamber of Commerce, like a lot of industrial bodies, is always in favor of cutting public expenditure and cutting taxation. It often takes rather simplistic view of the relationship between the two. It has begun to realize, truly years after it should have, that if you squeeze demand out of the economy and the public, as well as the private sector, then suddenly businesses start to fail and people lose their jobs, they stop paying taxes, they start claiming benefits and we go into a spiral of decline which is what?s happening across the Eurozone, as well as Britain at the moment.?

The business groups support the current austerity program, but say, ?It needs to work in tandem with a hybrid strategy that delivers both deficit reduction and growth.? One idea is to set up a so-called business bank which would support small businesses. The BCC has also suggested that, in addition to the current stimulus package of quantitative easing, the Bank of England should buy up small businesses? debt kickstarting the growth. As for the Chancellor George Osborne, the pressure is mounting. He?s been under fire since April when the Office of National Statistics slashed its annual growth figures, saying that Britain was now in the midst of its double-dip recession. In the Commons meanwhile MPs from both sides of the House have been calling for his resignation. Michael White, Assistant Editor at the Guardian, says that ?for now George Osborne?s job is safe?.

?There?s no possibility at all that David Cameron will sack George Osborne. He?s too closely identified with the Prime Minister personally as his intimate friend and colleague and also with the strategic policy decision they took, the austerity program they implemented after winning power in 2010 ? which is not to say that Osborne isn?t in a great deal of difficulty. He can?t blame Labor and he can?t blame the EU for all his woes and the consequences which are now being felt throughout the economy in declining growth or negative growth or the very consequences which he wound off.?

In the face of criticism from British business, the government says, it is doing everything it can to get Britain?s economy moving. The Treasury has pointed the plans for major UK infrastructure projects, as well as the funding for lending scheme under which the Bank of England supports bank lending to mortgage borrowers and businesses. But so far, at least in the short term, there?s little sign that such measures are working. If the government medium-term forecasts are correct, then growth will return, but a lot of economic ground will still have been lost.

Source: http://english.ruvr.ru/2012_09_03/British-economy-suffering-slumps/

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