It’s not all doom and gloom for Britain

There are many reasons to feel gloomy about the UK. Growth is sluggish, recession is looming and wages are falling. But this correction could be just what we need, says Matthew Lynn.

It isn't hard to find reasons to feel gloomy about the prospects for the British economy. Growth remains sluggish and we may well find ourselves in the middle of another recession by the start of next year. Unemployment is rising, retail sales are slack, wages are falling, and house prices are stagnant. But maybe we are missing the real story Britain could well be undergoing a fairly promising correction.

There is no question that Britain is one of the most indebted countries in the world. According to figures calculated by the McKinsey Global Institute, by 2008 UK debt reached a towering 489% of GDP. It was the highest in the developed world. Japan was second with 459%. Household debt came to 101% of GDP, non-financial corporate debt accounted for 114% of GDP, while the financial sector and government debt accounted for the rest. In short, Britain was maxed out on credit.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.