The new UK economy to surface in 2010- but it will be a slow and painful birth.

October 20th, 2009 by tom | Filed under Central banks, Daily News, Employment, Global Credit Crisis, Recession, Retail, UK Banks, UK Small Business, UK employment.

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Despite growing optimism which is begging to verge on euphoria, the anticipated recovery in Britain’s economy will be much slower and more painful than most people expect. Not only that, the face of the UK business world will have changed for ever, and many of the traditional ways of doing business will be consigned to the scrap heap. With many of the country’s leading financial analysts predicting that the UK economy succeeded in returning to positive growth during the third quarter, the chances are that growth in the economy will be much slower than those of the United States and even most member countries in the Eurozone.

Currently, the general consensus among the country’s leading economic pundits is that the domestic economy would struggle to achieve even 1 percent growth in 2010. One of the most problematic factors in the drive to push the UK economy forward is the likelihood of fairly stringent government spending cuts in 2010, alongside the restoration of sales tax to 17.5 percent after it was reduced to 15 percent for most of 2009. Other factors, that whilst necessary to help bolster the government’s strained coffers, include the end of a break on housing purchase duties and increases in income tax level, will combine to make recovery more difficult.

The long overdue and welcome trend by consumers in reducing their personal debt burdens have led to a considerable downturn in retail activities with the inevitable knock on effect in the production and distribution industries will also play a considerable part, whilst a small percentage of the extra funds pumped into the economy through the Bank of England’s £175 billion quantitative easing program appears to have had little effect on boosting bank lending and jump starting the economy.

To sum up, most economists concur that 2010 will be a better year for the UK economy, but not by much.

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