Friday, 6 November 2009

The sick man of Europe

A recent interview with Robin Bew of the Economist Intelligence Unit conducted by Cantos reveals that it is thought the UK is due for an extended period of 'duvet days'. If you have the time watch the whole interview because I believe what Robin says about the deeply divided French employment/unemployment situation has relevance to us too.

"So is it a return then to the UK being the sick man of Europe?

Yes, we're back to all that again I'm afraid, yes. Clearly Britain is lagging behind, so it's had at least one additional quarter of recession in comparison to the other markets. Hopefully it is only one, but it could turn out to be two.

But I think the longer run story is also much worse because the UK was so reliant on financial services and the financial services industry, clearly, when you look at some of the press reports right now you see that profitability has rebounded and all of that kind of stuff.

But the bigger story is that the banking sector is going to be much smaller and ultimately, drive a lot less growth through the British economy than it did in the past and whereas other countries around the world have other strengths to play with, for Britain, we had a lot of eggs in that financial services basket. For us, it's going to be a much more difficult long-term haul.

So I think Britain is going to look pretty sick for quite a long time."

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