This has turned out better than expected for the first quarter of 2011. Germany with 1.5% and France with 1% are both doing best of the bigger economies and better than the UK, which manged just 0.5%. Significantly, very significantly in fact, neither entered the global crisis with a property boom nor excessive consumer debt. This is a good moment to remind ourselves that at one point before the crash the total of British credit card debt was greater than the whole of the rest of Europe put together. It is this millstone, added to mortgage debt on wildly overvalued property assets, which is a much more severe restraint on economic recovery than either the cuts by the government or the national debt. Never before has it been so clear that an economic model was so deeply flawed.
A further and very welcome surprise is growth from Greece of 0.8%, better actually than the UK. Greece has cut to the bone and into it, so growth from there, if sustained, will give the notion that cutting is bad for recovery another bang on the head. Meanwhile the Euro remains relatively strong because of the northern industrial powers driving the recovery, a factor in making life more difficult for the likes of Portugal, Spain and Italy all of whom could do with a weaker currency. It is good for UK exports with our weak pound; of all this is the most convincing reason to keep interest rates low for just a little longer, inflation notwithstanding.
This was an awesome post. I need to practice so I can write like this – taking time and real effort to make a good post.