British Economy still contracting
the British economy is still contracting sharply. Provisional GDP figures for the second quarter showed a decline of 0.8 per cent from the first quarter. So is the Anglo-Saxon model of free- market economies now losing vigour compared with more state-directed forms of capitalism?The answer is no. The first reason is that recent economic statistics are provisional. The apparent superiority of the performance of other advanced industrial economies may prove illusory. Revised data may yet show a convergence of British and continental European growth.Second, the apparently poor performance of the UK economy is not necessarily rooted in its model. The constraints on the British economy are partly due to bad fiscal policy and partly reflect a weak banking system and an irrational stress on investment in housing. Those are serious deficiencies, but they are far from integral parts of a market economy. How then to explain the disparity in the figures, if indeed it exists? Germany’s return to growth in particular, given its reliance on manufacturing exports, suggests that the global economy may have rebounded from the pit of recession.
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