When Mark Carney (pictured above) said the UK economy is a glass half-full, he made us wonder what was missing from the empty half: old high street retailers, especially the butchers, bakers and grocers, along with the book and music retailers, youth employment, the housing market north of Watford, even the whole of Scotland perhaps.
The description was an interesting one, nevertheless, not least as Britain’s pint-sized economy is leading the rest of the world out of its longest post-WW2 recession. Or has it just got its snout slightly ahead of everyone else, trying to avoid a more general slide back into recession?
There’s not much point in looking at the defunct eurozone: growth is non-existent, apart from Germany, which is hoovering up vast surpluses because of the single currency, as it sucks the life out of all the southern economies, including France’s. The eurozone, designed by committees of visionless bureaucrats, is a giant mechanical imbalance device designed to destroy jobs and eventually bring about its own demise, like a gormless black crow that flies in an undeviating line straight into a giant pylon.
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Mario Draghi of the ECB sighed as he saw the figures, and immediately slashed the euro interest rate by 50 per cent. He knows that zero growth is likely to trigger the next eurozone banking crisis in 2014; the rest of us outside Europe know its economy is going nowhere until the single currency is jettisoned overboard.
Pictured above: Mario Draghi
Across the Atlantic, Uncle Sam is struggling to get out of bed, as its housing recovery is faltering and the big Fortune 500 companies’ treasurers sit solemnly on their fat corporate cheque-books. Confidence has not returned, except for the booming Bay area, driven by ephemeral social media giants like Facebook and Twitter, and their Mayfly Me-too look-alikes.
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The poisonous rhetoric between the Tea Party and the White House, which led directly to the sequester and then the shutdown, vapourised the frail confidence and fragile recovery. US growth is sluggish at best, and the Fed has no option but to continue its QE, pumping air into the leaking balloon of recovery, waiting for unemployment to fall below 7 per cent, while ignoring the 10.2 million who have fallen out of the figures as they have given up looking for jobs. If the EU is facing stagnating deflation, the US is facing stagnating inflation.
The Far East, led by Japan and South Korea, with China slowly getting back on its feet, is the region best poised to lead global recovery. As they look westwards, however, little Britain is the only other G7 man left half-standing.
Any major upset, such as a Banking Crisis 2 in Europe, or similar in China, coupled with the ongoing stalemate on Capitol Hill until the mid-term elections and probably until 2016, could easily see the global recovery slide back into the empty part of the glass, dragging the UK kicking and screaming along with it.
The ECB’s Ewald Nowotny said: ‘It’s stagnation that is the real danger.’ Carney was right to use a metaphor implying 50:50 imbalance and uncertainty, and the even chances of recovery gaining escape velocity.
