That’s the view of the Forum of Private Business’ economics expert, Professor Philip Whyman, who has warned of another tough year ahead for business.
He has predicted growth coming in at under 1% for the year – significantly less than growth forecasts from the CBI (1.2%) and the ONS (1.4%).
Professor Whyman, an economics academic from UCLan, thinks though that much will depend on the depth of the recession in the eurozone – the UK’s biggest trading partner – as to how things eventually pan out.
Commenting he said: “This has been another difficult year and with every prospect that the next few years will see little marked improvement.
“GDP growth has flatlined in 2012, with the economy experiencing a double dip recession.
“This sluggishness is a feature of financial crises as those firms and consumers who over-borrowed in good economic times start to pay off some of their debt, whilst the financial sector - having got their fingers burned by being too incautious - use available capital to strengthen their own balance sheets rather than lend to small businesses.
“The eurozone crisis is also far from resolved, thereby undermining the anticipation of an export-led recovery being based on trade with our closest neighbours.
“Consequently, forecasts for growth rates in 2013 are feeble ranging from around 1% by the Bank of England to 1.2% by the Office for Budgetary Responsibility and 1.4% by the CBI.
“Indeed, the Bank of England predicts that it will not be until 2015 at the earliest that the UK national income will have recovered to the levels last seen before the 2008 financial crisis – eight wasted years!”
As to what the Government could do to stimulate growth, Professor Whyman believes there are actions it could take. Primarily he says lending to small business must be improved by any means possible. He also suggests a programme to re-skill the economy to help improve employment.
“They could act now on providing more credit to those SMEs with good growth potential preferably by side-stepping the banks if they remain incapable of performing this function using a combination of insurance, pension funds and national or regional state banks to do what needs to be done.
“They could invest in a significant re-skilling of the UK labour force including revisiting recent higher education reforms which are likely to undermine this effort. They could engage in an effective industrial policy, which could achieve the rebalancing of the economy that both coalition parties advocate, by targeting investment towards those sectors where independent business advice might indicate a potential competitive advantage for the UK.
“And they could move quickly to stimulate the construction sector by engaging in infrastructure and house building projects which will be needed by the economy of the twenty first century.
“The only real limitation to these initiatives is the imagination of those in charge of the national economy.”
