Is the UK’s economic recovery built on sand?
There is no doubt that great strides have been made since the dark days of 2008 to 2011.
We have more people in work, fewer economically idle, and increasing confidence among consumers and in the business community at large.
The growth trajectory is now consistently upwards but, despite the positive trends, there are still fears the UK is headed for a fall rather than a new economic dawn.
And those urging caution are not
bit-part players in Britain’s economic revival they are not the lunatic fringe.
Last week we had Business Secretary Vince Cable putting forward his concerns about the emerging bubble in the property market where a lack of stock, cheap mortgage rates and Government-backed incentive schemes designed to get the sector back up off its post-crash knees have conspired to send prices higher.
Meanwhile, March proved to be a record month for the UK car industry as the effect of the new ‘14’ plate release washed through order books. Registrations in Scotland were more than 2,700 ahead of the strongest March on record, a figure set a decade ago but, despite the immediate sales cheer, there was concern from the industry body the SMMT that such levels could not be sustained in the longer-term.
Yesterday, the British Chambers of Commerce again entered the fray and warned that all was not well with the recovery.
On the face of it, BCC’s quarterly poll of 8,000 firms was a strong endorsement of the current economic model, with service exports at an all-time high, key manufacturing balances at record levels and a strengthening of short-term sentiment.
However, it came with a health warning over the many “false dawns” which the UK economy had endured since the recession, and a call from chief economist David Kern for a change of course.
“Given that UK personal debt levels are too high and need to fall, it will be hard to maintain growth levels in the medium-term without significant structural changes to our economy,” he said.
Such warnings are dismissed at our collective peril, as a recovery predicated on increasing personal debt can only end in failure when the credit sources are exhausted.
That is the definition of an economy built on sand.
I agree with Mr Kern that a radical rebalancing of the UK economy is required in order to achieve long-term sustainable growth.
Significant investment in infrastructure is key a 21st century economy cannot operate with 20th century road, rail and digital connections as is the ability to innovate.
We also have to properly reawaken the sleeping giant which is the UK’s manufacturing base, significantly increase our export base, and put Britain back at the cutting edge of product development and service design.
In each area a forensic examination of current practice in the UK against best practice globally must be carried out in order to identify the keys that will unlock our future economic potential.
It is then up to the Government and business leaders to work together to develop and deliver the framework for change.