While the unemployment rate of Spain and Greece roaring extremely high these days and economies in the European Union rest down in the trough, good news has finally arrived from the Office of National Statistics. Recent statistics showed that the United Kingdom's economy grew 0.3% during the first quarter of 2013, which relieves the fear of the British economy falling into a triple-dip recession. Is this a sign that United Kingdom is getting itself out of the European Financial Crisis?
The answer seems negative, but the British economy has made significant progress. Business activities have grown fast since the Olympics-related upturn, led by the service sector, whose output grew by 0.6% in the first quarter. Growing businesses have created over a million new jobs for the U.K. and this number is expected to increase further. While the chancellor has faced pressure from the International Monetary Fund to rethink the pace of the austerity program, the government insists it is vital to bring down borrowing, and guarantee long-term growth. The fact is that the government’s austerity measures play an important role in the United Kingdom's economic growth these days.
Although the growth of 0.3% prevents the U.K. economy from deterioration and the British call for a celebration, the government should think of its next step to maintain this positive trend. Radical bank reform would allow the British government to set up a stable economy. The tremendous expansion of bank credit has proven to be a problem as it essentially caused the financial crisis worldwide just five years ago. The government should limit credit and encourage savings in order to avoid further economic downfalls. Moreover, Ed Ball, Shadow chancellor, suggested that the U.K needs a lower 10% starting rate of tax to ease the squeeze on millions of people with middle and low incomes. By lifting the overall standard of living in the country, people are willing to invest and consume more, and this would further revitalize the sluggish economy.
In general, the British economy has still not recovered from what has been the longest and deepest recession in modern society but encouraging signs have been seen in the United Kingdom. Bank and tax system reforms might be additional solutions for the economic downturn. What do you think are some other ways to renew the British economy?