It wasn't that long ago when the UK was the envy of everyone in Europe. Workers - especially those in banking/finance as well as laborers from Eastern Europe - all flocked to the UK to make British pounds and ride the wave. They're all leaving now, heading back home to the Continent where the Euro is on par with the once-strong Pound and life is less expensive. While visiting the UK this past week everyone was talking about the state of the economy and luxurious bonuses still being paid out. Northern Rock - the first casualty of the credit crisis - just handed out bonuses despite being in talks with the government for an inject of another $14 BILLION.
The big question today is who will emerge as the leader from this crisis within Europe. The UK appears to have some significant hurdles to overcome including an economy that was heavily based on banking and finance. It's unlikely that industry will be anything close to what it was during the Blair years any time soon. From The Independent:
The British economy has "fallen off a cliff" and entered a recession that shows every sign of developing into the worst since the Second World War, with unemployment soaring above three million by next year.
The slowdown has turned into recession: the question is now whether the recession will become a slump.
The Office for National Statistics said yesterday that the British economy shrank by 1.5 per cent in the last three months of 2008. Worse than most economists feared, it follows a contraction of 0.6 per cent in the third quarter of last year, and thus satisfies the conventional definition of recession, being two successive quarters of negative growth.
Output is 1.8 per cent lower than this time last year. It is the first time the UK economy has shrunk since 1991, and is the worst performance since the exceptionally deep downturn of 1980. The British economy grew by just 0.7 per cent last year, by far its worst performance since Labour came to power in 1997. The ONS also announced a fall in the value of retail sales last month, prompted by heavy discounting. The pound and the stock market slumped again on the news. Sterling hit a 24-year low against the dollar to close at $1.35. It stayed close to parity against the euro, while the FTSE 100 index fell almost 2 per cent before a late rally.
