Helping the UK recovery

Posted By: Peter Evans
Date Posted: 19/07/2011

We should all take note of the recent reports of the nine banks in the EU that have failed the "stress test". In plain English that means that they are short of sufficient funds according to the financial tests. It has produced considerable alarm amongst analysts as it threatens the financial stability of the EU and the viability of the Euro currency. I am not suggesting that the Euro will disappear immediately but its future looks decidedly grim.

The first step [politically] will almost certainly be the split up of the EU as it exists at present. It is an indication of the very fragile nature of the economic situation. This is not the time to attribute blame or to embark on the kind of action being taken by those in Greece and elsewhere - who seem to believe that civil disorder will help the return of prosperity – it clearly won’t!

The UK is in a more fortunate position, despite having a huge amount of debt. (It cost us a staggering £400 million per day in interest alone at the time of the national elections in May 2010. It has been reduced to £350 million a day since then.) Its actions taken since May 2010 explain why the UK has been rated so highly by the IMF and the World Bank – the UK has tackled its debt while other countries have stubbornly failed to do so.

While countries across the EU have suffered interventions by the IMF to stem the haemorrhage of money due to their ambitious spending programmes, the UK became uniquely placed in earning the confidence of the IMF and the World Bank. The effect of this was that the UK now has the lowest interest charge in the World for its debts – a stark contrast to governments who had forged ahead with imprudent spending plans.

The USA too has to make urgent changes before 4th October 2011 if it is to avoid an unavoidable financial crisis. It is worth pointing out that the UK is also in a better position economically than the USA at present - where the almighty dollar is now at risk.

Those who claim that the UK should have taken a different approach by going forward on a programme that demonstrated less determination to tackle its huge debts will continually be reminded of the lessons now being learnt across Europe and soon in the USA.

The recovery in the UK is currently on course. In Rochdale we have seen £millions provided to two successful companies, Holroyds and Tygavac in order to expand their successful businesses; this will provide more jobs and the companies will start to recover the earning potential of the UK that has continually reduced since 1997. (In 1997 50% of our workforce worked in Manufacturing and Engineering - by 2010 it was down to 14%).

This analysis contains facts that can all be verified. The predictions made can be monitored for accuracy too. The important thing is to recognise the signs mentioned and guard against those who want to replicate what is happening in Greece or suffer the other unpleasant experiences elsewhere. Given that understanding, we shall emerge from the economic difficulties faster and with less hardship than we will witness in the other EU countries or even in the USA.