UK: let’s be more British, please

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If we add in the dull nature of the eurozone recovery, British laziness becomes more understandable. The first and second largest economies of the Old Continent have been trembling since the beginning of the last quarter due to a lack of effective reforms, in the case of France, or due to Germany’s strong insistence on hiding the dirty linen of its domestic banking sector.

Europe represents more than 50% of the UK’s exporting portfolio. Thus, consensus among analysts is that we will have to wait until mid 2015 to see changes in the country’s monetary policy.

Alas, if only the developed world were a little more British, things would probably go much better. After all, according to International Monetary Fund data, the UK has the highest growth ratio among the G7 countries: 3.2% in 2014.

The number of insolvent companies was at 0.54% in the third quarter (i.e. below the levels of 1984), after a fall of 12 percentage points. Data show that the service and construction sectors –which were worst affected in 2007- now lead the new national economic thrust.  Low unemployment, which is 6% (below 2 million) has become the bedrock of domestic consumption.

“It is clear that the global economy recovery is increasingly unbalanced,” chief economist of the auditing firm ACCA, Emmanouil Schizas, explained after the publication of his report on British business sentiment.

Up to 31% of businesses are optimistic about the future; 7% less than three months ago. Schizas explains that this drop in confidence is inevitable given that hopes of a eurozone recovery are evaporating further by the week and fears about deflation continue to mount. From a British perspective, others are to blame.

Maybe they are right up to a certain point. According to GlobalCapital, which is a division of Euromoney, senior managers at the British sovereign debt Office Management declared they were surprised when 55-year bonds had a yield below 3%.

People like the United Kingdom. Within markets and beyond. Let me share with you an anecdote: last September, British airports received more than 25,000 new flights, 2.3% more than the same month of 2013.

The conclusion is that the British economy is reacting to continuing difficulties in a more dynamic manner than other economies around it. Nonetheless, that performance could become a burden if the UK uses it to justify an excess of national pride.

Schizas admits that sound liquidity flows in the UK market have helped to consolidate the return of confidence within the financial industry, “with little benefit for the real economy.”

The housing market saw its first price recession in 17 months.  Net value of financial assets has stopped growing. One out of five households says that they are suffering from “serious difficulties” to make ends meet –less than half than in the European Union. One out of four British children lives within the poverty threshold. One million British people need help from food banks, according to the charitable society Trussell Trust. Around 430,000 firms have been classified as “zombies” by the business confederation CBI, or are about to go bankrupt. Many are artificially fed by the state or are suffering from credit shortages.

Manufacturing production fell almost 0.5% between July and September, 0.3% above the market consensus. And the 1.2% inflation figure has alarmingly exceeded the 0.7% salary adjustment.

While serious concerns about economy should be the other of the day, national debate is focused on the “cultural colonization” that would inevitably follow should a British team enter the American NFL. In 2013, only two teams generated profits of 32 million pounds.  A clash of identity is guaranteed.


About the Author

Victor Jimenez
London contributor at, reporting about the City and the Eurozone economies. He regularly writes for Spanish newspaper group Prensa Ibérica--some of his features include shared work with journalists of The Daily Telegraph and the BBC.

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