Monday, May 30, 2011
Where has all the growth gone?
I may have come across this strategy note via an HPC post, so apologies if you have already seen it. Real estate, finance, health, education, construction and public administration account for 58% of UK output. But none of those sectors is going to be showing any growth for the foreseeable future. George Osborne is hoping that sustained 3% growth, not spending cuts, to balance the books in 2016. But looking at it from a sectoral point of view it is impossible to see where the growth is going to come from. Much is relevant to HPC: "With real disposable incomes now falling, interest rates poised to rise and the spreads on mortgage lending far higher now than they were before the crisis, a bet on property price recovery would require courage bordering on foolhardiness."