[NYTr] British Economy, More Mirage than Miracle: Experts

[All the News That Doesn't Fit]

Prensa Latina, Havana
http://www.plenglish.com

British Economy, More Mirage than Miracle: Experts

London, Oct 24 (Prensa Latina) Britain's growth over the past 15 years
has been "more mirage than miracle", according to a report from think
tank Policy Exchange.

German economists Holger Schmieding and Oliver Hartwich say they came
to Britain "believing it was a free-market haven."

The German authors of a new report into Britain's economic 'miracle',
described themselves as "disturbed" by the state of the British economy.

They point out that even as the rest of Europe is trying to cut taxes,
the UK is "relapsing into high tax and high-regulation sclerosis," says
Ambrose Evans-Pritchard in The Telegraph.

This backwards slide has only been masked by the housing boom, which
has in turn fuelled a debt binge, leaving UK consumers with no savings.
The UK is now in worse fiscal shape than almost any other major Western
country, says the report.

That's not exactly comforting at a time when house price growth - the
major driver of the economy for several years now - is slowing.
Monetary Policy Committee member Kate Barker has just warned that
buy-to-let could be a potential trigger for prices to fall.

"A source of weakness could be the buy-to-let market, given a
combination of higher interest rates, little change in rents, and
reduced expectations of price appreciation." The sector accounted for
12% of mortgage lending in the first half of this year.

Martin Waller in his City Diary column in The Times reckons the
property market must be on the turn, because stories about people
paying stupidly high prices for "daft or inconvenient" properties have
dried up.

Meanwhile, the other major driver of growth - the money shuffling in
the City - is still under pressure from the continuing fall-out from
the US housing market collapse.

As Damian Reece puts it in The Telegraph: "If our first city sees a
slow-down, will our second city be in a position to pick up the baton?
Not if it's Birmingham, where unemployment is 7.4% and 20% of the
working population have no qualifications."

As Reece points out, the British "vast public sector" is "only just
countered by a private sector… over-reliant on financial markets that
look ready to go overboard any moment."

It looks like it won't be long before that comforting mirage of strong
growth and prudent management shimmers and vanishes from view, says
Money Morning online business news service.

ef PL-29