Webinar: UK recovery not 'sustainable'
Feb 03, 2010
Economic outlook for next decade is bleak
The UK’s manufacturing boost is neither sustainable nor a sign that ‘things can only get better’. This was the view expressed at a webinar held by the UK’s IR Society yesterday.
Speaker Stephen Kingsley, senior managing director of FTI Consulting, said the ‘good times’ from 1997 to 2007 have left the UK with spiraling debt commitments and the financial industries upon which it depends should not be pilloried. The webinar, ‘Predictions for the decade’, was given the informal subtitle, ‘What is going to make us rich for the next 10 years?’ by Kingsley.
Manufacturing in the UK, the Eurozone, the US and Asia surged in January, with the UK’s index for manufacturing reaching its highest level of growth for 15 years. But Kingsley said hopes that this signals recovery for the UK are unrealistic. The country doesn’t have the workforce to survive on a base of manufacturing and, if it did, its income expectations would be too high.
Instead, said Kingsley, the UK needs to maintain its focus on financials if it is to recover. ‘We are in danger of killing the goose that has laid a lot of golden eggs and the way regulators [and others] are treating the City does not bode well for the future of this country,’ he warned.
Looking back over the last 13 years, Kingsley recalled that ‘we had a very good time, frankly. We all felt pretty good to be British.’ Sticking with the City that brought the boom, Kingsley added, is necessary due to the plethora of other problems facing the UK.
Aside from the borrowing requirements that predate the financial crisis, and which have since escalated, Kingsley said ‘the UK faces two ticking time bombs: the need to reform a disappointingly unproductive public sector and the related issue of pension commitments.’ Because the UK faces a compound crisis, ‘the sooner we sort out recovery packages, the better,’ he concluded.