Britain to be hit worst by recession
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Of all developed nations, Britain could be hit hardest by the global economic crisis, experts agree. Leading figures in finance, economics and financial reporting are adamant that the anxiety that currently dominates public discourse is far from exaggerated.
“You think what we are seeing now is bad?” asks Willem Buiter, professor of economics at the LSE. He predicts that the recession will be longer and tougher in the UK than elsewhere.
Vince Cable MP of the Liberal Democrats agrees and points out that the British financial market is out of control: “The balance sheet of the RBS is larger than the entire economic output of the UK.”
“We have a massive financial sector and we already had a lot of debt when we went into recession. So yes, this is serious,” says Financial Times columnist Gillian Tett, one of the first to investigate the murky mazes of collateral debt and subprime mortgage lending.
Earlier this month, rumours emerged that the UK might even lose its cherished triple-A credit rating after financial ratings agencies such as Moody’s issued reports highlighting Britain’s vulnerabilities. Spain has already lost the coveted triple A status and while the UK is not in the same high-risk category as Ireland, it has been downgraded from “resistant” to “resilient”.
Buiter points to a combination of ballooning personal debts, the crumbling housing market, a weak manufacturing sector and a disproportional reliance on financial services industry as key reasons for his dreary forecast.
But not everybody shares the view that Britain will suffer more than other developing nations. The BBC Radio 4’s Evan Davis said: “I did have the view that it would be worse in the UK. But it’s so bad everywhere right now that
Britain is also suffering from a collapse of confidence. A recent WIN poll has shown that consumer and investor pessimism in the UK is the highest in Europe and the second highest in the world – only the Japanese are gloomier.
