Why is Britain doing so badly?

[rov1200]

http://news.bbc.co.uk/1/hi/business/8198766.st m

News today that France and Germany have emerged from the recession while Britain is still deeply in a slump. Brown did say we would be one of the first to emerge from the recession but this is false.

The differences between us and these successful countries may be the engineering section with people encouraged to buy. We have almost totally relied on money supply or quantative easing.

Have we tackled the problem of recession in completely the wrong way?

[rojash]

The headline's a bit misleading. If you read the article, you'll notice that in fact the tiny rise in the economies of France and Germany can be interpreted in a number of ways.

Britain is mainly a service economy, which means it tends to lag behind manufacturing economies at both ends of a recession (i.e., recession sets in slightly later, and also ends slightly later).

[rov1200]

Rojash nobody doubts we are a service economy but our problems can be put down to be a minor player when it comes to Europe in the manufacturing sector. We now rely too heavily on the financial sector and we all know where that has got us. The financial fat cats have put themselves first leaving the country in chaos and leaving the taxpayer to correct their mistakes.

Now we have put them back on the rails again, the bonuses will start flowing again and trying to get a quick buck.

Brown's mistake was his wholesale support of this sector but ignoring the real people who produce things. He has let them go to the wall. If he had allowed a few �bns in this area the recession may be over. We've blown it!

[rov1200]

Dancairo The reason why Germany and France show signs of coming out of the recession is said to be because of the car scrappage scheme. Britain belatedly started this scheme but it is self financing, the �1000 they put towards a new car is offset by the recouperation of VAT.
No big risk there and we could have done more!

[tamborine]

'cause this stoopid Gov gives us nowt back!

[rov1200]

Quite agree Tamborine they were too busy giving handouts to the bankers. If they had put the money into shoppers pockets we could have stimulated the economy by buying things. The cut in VAT was so widespread it made no difference to peoples buying habits. The �12bn could have better be spent elsewhere. It was just a lazy giveaway with nobody in mind.

[jake-the-peg]

Actually Brown and the Government have been able to stimulate the economy in ways that were not possible in France and Germany.

The "quantitative easing" project ( a controlled money printing exercise) has put more money into the economy at the same time devalued the pound against the Euro (but not the dollar as they've done the same)

The result of this is that British goods and services are now a lot cheaper to Europeans which helps British companies.

No We've tackled the problem in the right way.

Nobody's given hand-outs to bankers - a number have had to be bailled out but have given up a substantial part of their banks to do so. And have had restrictions placed on them on what they can and can't do.

Such restrictions do not at the moment apply to banks that got private funds or did not need help - like HSBC

But even there new restrictions are coming in in January

[rojash]

Sorry, rov1200, I misunderstood - I thought you wanted an answer to your question. I now realise that you wanted a springboard to jump off for a rant against the government.

I agree that Britain would be better off with a mixed economy, but it was Thatcher who was largely responsible for the demise of the manufacturing and engineering sectors. The main mistake of this government (in economic terms) was to simply continue with same agenda.

[KARL]

If the (minuscule) positive figures for France and Germany are due to effects of the car scrappage schemes then that is not an auspicious sign - why encourage a single industry (some argue there is overcapacity anyway) and for how long can that go on before some form of stagnation or implosion ? In the 60s and 70s, Britain provided the world with an example of how industries could be burdened and run into the ground - strike upon strike and an attitude straight out of Peter Seller's film 'I'm alright Jack'. Foreigners looked upon agape and British mass-made cars were largely seen as a huge disappointment due to unreliability. This went on into the 80s and finally a line was drawn under the whole sorry episode but by that time much of manufacturing was in the hands of government which was being forced to subsidise to excess. A lot of industry could not by then convert back to reality and now pay its way, so it folded. Yes, it was the Thatcher government that made the decision, but the decision was inevitably coming - the government did not kill industry, it was already dying. A sort of shift took place then of the kind that happens when the pendulum has to reverse its travel. That is apparently about to happen in the social services area where present policies in 'protecting' families will change to 'protecting' children - children will possibly increasingly be forcibly removed from dysfunctional families rather than leaving them to continue in miserable homes. One hears more and more calls of 'enough is enough'.

[KARL]

Apologies for the wrongly placed apostrophe - please read 'Peter Sellers' '

[rov1200]

Karl, you say why choose the car scrappage scheme rathert than other products?

By targeting the car industry, then the majority of the population are affected, the capital on each purchase runs into �thousands and the components that go to make a car involve thousands of workers. Britain has neglected the car industry but there are still many who produce the parts which are then shipped abroad.

[rov1200]

Jake,
Quantative Easing has not been tried before in the UK and there is no sign yet it has worked. It could turn out to be a very costly mistake. What annoys many is you are trying to solve the initial problem that started with the banks and trying to solve the problem by giving a further leg up to the same industry. Its like pouring oil on a raging fire.

If we are to recover from this crisis I don't think the banks will be the main solution. Even the government have now admitted our recovery depends on the offshoots generated by successful policies from France and Germany. That is some admission of failure!

Interestingly the banks that are now recovering such as Barclays refused government help but the state funded ones are still in the doldrums.

[rov1200]

Rojash my criticism is directed at the government policy and if the Tories had been in power their intended credit squeeze would have been far worse. We should as a country admit sometimes that other countries are tackling the problem better and learn from them.

[sambro]

theyre not, its people like you believing everything they read!!