What will happen to the UK economy
National Bureau of Statistics reported UK GDP falling by 0.7% in the II quarter of 2012. These figures were significantly worse than expectations of most experts, who believed that the economy will shrink by 0.2%. Thus, Britain is experiencing the deepest recession in the last five decades.
Construction of new homes fell by more than 5% during the reporting period, indicating a high probability of a downturn in the economy. Industrial production also fell due to falling demand for British goods in Europe. What will happen with the UK economy in the second half of this year, and in 2013?
A few weeks ago, pundits predicted economic growth of 0.7% at the end of III quarter, which was supposed to occur due to the Olympic Games in London. But the depth of the fall in the second quarter can not talk about the significant growth of the economy in the coming months.
However, increasing numbers of tourists who come to London to see the performances of the leading athletes of the world, will have a positive impact on the economy. Perhaps the drop in GDP growth will slow in the third quarter because of the Olympics. The fall will resume with a bang at the end of the year, which is associated with a high probability of default of Greece and its possible withdrawal from the eurozone.
Further economic dynamics in the UK will depend on the situation in Spain and Italy. If the leadership of the EU will be able to retain economic and political situation in these countries is under control, there is a possibility of ending the economic downturn in Europe. Increased demand for British goods and to stabilize the situation in the European financial system will allow the UK economy back to growth.
Out of Spain or Italy, the euro and the defaults on the obligations of these countries will lead to unpredictable consequences for the global economy. Bankruptcy global financial institutions, the political turmoil in Europe and the deep recession in the region – that is the result of a possible collapse of Spain.
UK economy remains hostage to the situation on the mainland. Is it possible to find new markets for British companies? Probably yes, but the search for these markets takes time. Unfortunately, the economy can not wait for a long time, so next year will be difficult for the British.