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Macroscope | Promise of US economy shows up Brexit Britain’s need for investment
- While the US is ramping up domestic investment to bolster growth, a cash-starved British government is trying to spend its way out of trouble
- Without the lifeblood of new investment to replace departing industries, the UK could be heading into a new economic ice age
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It’s a tale of two economies, one full of promise for the future and the other beset with problems. US President Joe Biden’s recent upbeat State of the Union address was in stark contrast to a UK government struggling to free Britain from the grip of recession.
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Biden is committed to ramping up domestic investment to bolster US growth. Meanwhile, a cash-starved UK government is desperately spending its way out of trouble.
The secret to sustainable recovery is stronger investment, and the UK economy is falling miserably behind. Three years after leaving the European Union, British companies are attracted by better opportunities abroad and quitting the country.
If Brexit was supposed to be the launch pad for a manufacturing idyll operating on Europe’s fringe, the dream is turning into a nightmare. UK economic policy needs to change fast before the ship goes down with all hands.
The UK might have dodged a recession in the last quarter of 2022, but there was little to cheer about as the economy flatlined in the fourth quarter after a 0.2 per cent drop in the third quarter. With gross domestic product sinking by 0.5 per cent in December alone, the economy is not out of the woods yet, with recession a frightening prospect for millions of UK households already experiencing deep hardship from the cost-of-living squeeze.
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According to the International Monetary Fund’s January forecasts, a UK recession is imminent with economic output set to fall by 0.6 per cent this year.
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