The French and German economies are both reported to have risen for a second consecutive quarter. It is not the amount of growth they hoped for, but it is enough to confirm that they are out of recession. In fact the countries of the eurozone are now collectively out of recession with a growth of 0.4 percent during the third quarter. Even the EU as a whole, including its non-euro countries, grew by 0.2 percent over the same period. The US and Japan are also out of recession, so where does that leave Britain, "best placed of all countries to face the crisis because of the fundamental strengths of our economy"? It leaves us still in recession, a rather lonely position these days.
The thought in the minds of some analysts is that the worldwide growth might simply be a reflection of the massive stimulus packages which have boosted economies artificially, instead of engendering real growth. The BBC's Nigel Cassidy suggests that "Nobody can even guess what will happen to growth when national governments stop pumping credit into the system." Certainly the amount pumped in by the US and European governments must have had some economic effect, even if the contribution by our own UK taxpayers has not, apparently, been enough to do the job.
Governments hope, of course, that real growth will take place alongside the activity they are stimulating, and that the incentive packages can be quietly phased out as real demand replaces government-induced demand. But since the growth of any kind of demand is proving so sluggish in the UK, there have to be fears that its economy will shrink again when the government's drip-feed is turned off.
It won't be Gordon Brown's problem to solve, of course, but someone will have to tackle the deluge of debt he is leaving behind. There will be cuts, but they will be difficult and unpopular, and are likely to leave his successors disheartened. The real solution is growth, massive and rapid. And the way to achieve that is to turn enterprise loose by slashing taxes and regulations across the board, even if they have to borrow more at the outset to do it.
It could happen, but those wise enough and with sufficient means are already buying gold and reading the Swiss property pages…
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