Sorry we couldn’t be more positive today but here’s the latest New Year gloom from UK and Europe-based economists and business executives:
UK deficit warning from City economists
Britain is in danger of succumbing to a budgetary crisis this year, with the economy likely to stay in the doldrums until at least the end of 2010, a Financial Times survey of economists warns.
Asked to name the three biggest risks to the economy, 37 of the 79 economists polled said the UK was threatened by a fiscal crisis that could derail any revival.
Howard Davies, director of the London School of Economics and a former member of the Bank of England’s monetary policy committee, said: “The major risk is the loss of confidence in the government’s ability to get the public finances back under control.”
Sir John Gieve, former deputy governor of the central bank, said that inadequate plans for addressing the fiscal deficit could result in sharp rate rises and a fall in the pound.
The warning from City economists, former MPC members and academics comes as politicians stepped up pre-election skirmishing.
Meanwhile, European executives are feeling similarly downbeat, according to an informal survey of CEOs and management consultants by the FT, headlined “Europe’s chief executives see sluggish 2010“.
Now is the time to “make the tough decisions”, said Hans-Paul Burkner, head of Boston Consulting Group, urging CEOs to rethink their business model, their positioning and the next five to 10 years “very, very carefully — and not assume that they can go back to what they experienced up to 2007″.
“I think it is important to do a fundamental reassessment of how well you are positioned, how the markets in which you’re operating are changing, how will the competitive landscape change. And to be very honest to yourself about your strengths, your weaknesses and to make adjustments in terms of the portfolio of your activities.
But the strongest bit of advice comes from Alan Middleton, chief executive of PA Consulting in the UK, who says:
“Many of us are battle weary. It’s been a very tough year, 2009… As we move into 2010, strong leadership, strong messages from the front, are terribly important.”
Related links:
European business braced for struggle – FT
Inflation and debt fears point to nervous recovery – FT
Experts divided on when to tackle deficit – FT