UK economy overtaken by Italy
Discussion
http://www.telegraph.co.uk/finance/financetopics/r...
"Britain's economy has been overtaken by Italy for the first time in a decade and a half, after official figures showed that the UK is now in the longest recession in recorded history."
"The economy unexpectedly shrank by 0.4 per cent in the third quarter of the year. It takes the length of the recession to six quarters, or 18 months – the longest continuous contraction since comparable records began more than half a century ago.
It represents a double humiliation for Gordon Brown and Alistair Darling, who have repeatedly pledged that the UK is better-placed to withstand the recession than other major countries.
When the recovery finally comes, it must be made sustainable The figures from the Office for National Statistics also makes it highly likely that the UK will be the last leading industrialised nation to emerge from recession with forthcoming statistics expected to show the US, Germany, Japan, France and Italy growing between July and September.
But most embarrassing of all will be the news that as a result the UK has now fallen beneath Italy for the first time since the mid-1990s to become the world’s seventh biggest economy. In the third quarter of the year, Britain’s economy generated around £347.5 billion in cash terms. Italy’s economic output in the same period, based on conservative forecasts calculated by Citigroup, was some £350 billion.
It will be acutely humiliating for the Prime Minister, who in 2001 told Parliament: “When [the Conservatives] left power, we were behind France and Italy, the sixth largest economy in the world, and we are now ahead of them, and the fourth largest economy in the world.”
The fall in Britain’s comparative size since then has been due partly to the devaluation of the pound by almost a third and partly to the severity of the recession. The UK dropped behind France last year largely thanks to the weakness of the pound.
In 1987, the first time Italy overtook Britain’s economy, the landmark moment was dubbed “Il Sorpasso” and prompted wild celebrations in the streets of Rome. The UK then regained its prominence in the mid-1990s, and by 2000 its economy was some 35 per cent bigger than Italy’s.
The Shadow Chancellor, George Osborne, said: “Gordon Brown claimed Britain would weather the recession better than other countries. Now we find our economy has shrunk to be smaller than Italy’s. The whole country is suffering because of his weak leadership and failed economic policies. Only a strong Conservative government will give our economy the confidence it needs.”
The Italian Ambassador, Giancarlo Aragona, said that this “secondo sorpasso” was a testament to the resilience of the Italian economy.
“Obviously the mood nowadays is quite different to the '80s: then there was an enormous amount of optimism; today we are in a global crisis,” he said. “The word 'celebration’ would be an exaggeration, but in Italy this news will be seen as confirmation of that fact that although so many doomsayers were predicting disaster for the Italian economy, we have proven our resilience. We managed our difficulties with skill and are now coming out of this crisis.”
The Prime Minister has being pinning much of Labour’s hopes for a bounce back in the polls ahead of the general election on being able to prove that the economy is bouncing back from recession. He has given specific hints that he expected growth to return, saying in an interview last month: “I think you’ll see figures pretty soon that shows the action that Britain is taking yielding effect... we are now coming out of recession as a result of the actions that we’ve taken.”
Michael Saunders, chief European economist at Citigroup, said: “In the light of this, you would rather hope the Chancellor would go back to the Budget and reappraise his statement that the UK is well-placed to withstand the crisis. The UK has had among the biggest negative effects of the global financial crisis.”
Professor Peter Spencer of the University of York said: “I’m sad to say this fall in the rankings is unlikely to be a temporary one. Economies like our own and the US have to adjust to problems in our credit markets – something far more difficult than what faces the Italian economy, which has some good export sector.
“They will probably recover faster than us. We have been living on credit for too long, and have to adjust to the fact that we’ve got to get out there and start exporting. The world does not owe us a living, and we cannot hide the fact that we can’t keep borrowing off it forever.”
Mr Darling has by contrast remained more cautious, saying yesterday: “I have consistently said that I did not see us returning to positive growth until the turn of the year.”
The Treasury is still hopeful that the ONS will revise its figures, and that they could yet show Britain growing in the third quarter.
But yesterday’s shock news means the Treasury faces re-examining the pre-Budget report which was expected to be delivered next month against a backdrop of positive growth. Mr Brown’s hints in a recent interview with the Daily Telegraph that the Budget forecasts could be revised upwards now look unlikely to be fulfilled, while the economy’s weakness may constrain Mr Darling’s ability to balance the budget in the coming years.
The news also raises the likelihood that the Bank of England may be forced to pump more money into the economy through its quantitative easing programme next month."
Oh dear Gordon, you and your stinking, rotting ilk really are not fit for purpose
"Britain's economy has been overtaken by Italy for the first time in a decade and a half, after official figures showed that the UK is now in the longest recession in recorded history."
"The economy unexpectedly shrank by 0.4 per cent in the third quarter of the year. It takes the length of the recession to six quarters, or 18 months – the longest continuous contraction since comparable records began more than half a century ago.
It represents a double humiliation for Gordon Brown and Alistair Darling, who have repeatedly pledged that the UK is better-placed to withstand the recession than other major countries.
When the recovery finally comes, it must be made sustainable The figures from the Office for National Statistics also makes it highly likely that the UK will be the last leading industrialised nation to emerge from recession with forthcoming statistics expected to show the US, Germany, Japan, France and Italy growing between July and September.
But most embarrassing of all will be the news that as a result the UK has now fallen beneath Italy for the first time since the mid-1990s to become the world’s seventh biggest economy. In the third quarter of the year, Britain’s economy generated around £347.5 billion in cash terms. Italy’s economic output in the same period, based on conservative forecasts calculated by Citigroup, was some £350 billion.
It will be acutely humiliating for the Prime Minister, who in 2001 told Parliament: “When [the Conservatives] left power, we were behind France and Italy, the sixth largest economy in the world, and we are now ahead of them, and the fourth largest economy in the world.”
The fall in Britain’s comparative size since then has been due partly to the devaluation of the pound by almost a third and partly to the severity of the recession. The UK dropped behind France last year largely thanks to the weakness of the pound.
In 1987, the first time Italy overtook Britain’s economy, the landmark moment was dubbed “Il Sorpasso” and prompted wild celebrations in the streets of Rome. The UK then regained its prominence in the mid-1990s, and by 2000 its economy was some 35 per cent bigger than Italy’s.
The Shadow Chancellor, George Osborne, said: “Gordon Brown claimed Britain would weather the recession better than other countries. Now we find our economy has shrunk to be smaller than Italy’s. The whole country is suffering because of his weak leadership and failed economic policies. Only a strong Conservative government will give our economy the confidence it needs.”
The Italian Ambassador, Giancarlo Aragona, said that this “secondo sorpasso” was a testament to the resilience of the Italian economy.
“Obviously the mood nowadays is quite different to the '80s: then there was an enormous amount of optimism; today we are in a global crisis,” he said. “The word 'celebration’ would be an exaggeration, but in Italy this news will be seen as confirmation of that fact that although so many doomsayers were predicting disaster for the Italian economy, we have proven our resilience. We managed our difficulties with skill and are now coming out of this crisis.”
The Prime Minister has being pinning much of Labour’s hopes for a bounce back in the polls ahead of the general election on being able to prove that the economy is bouncing back from recession. He has given specific hints that he expected growth to return, saying in an interview last month: “I think you’ll see figures pretty soon that shows the action that Britain is taking yielding effect... we are now coming out of recession as a result of the actions that we’ve taken.”
Michael Saunders, chief European economist at Citigroup, said: “In the light of this, you would rather hope the Chancellor would go back to the Budget and reappraise his statement that the UK is well-placed to withstand the crisis. The UK has had among the biggest negative effects of the global financial crisis.”
Professor Peter Spencer of the University of York said: “I’m sad to say this fall in the rankings is unlikely to be a temporary one. Economies like our own and the US have to adjust to problems in our credit markets – something far more difficult than what faces the Italian economy, which has some good export sector.
“They will probably recover faster than us. We have been living on credit for too long, and have to adjust to the fact that we’ve got to get out there and start exporting. The world does not owe us a living, and we cannot hide the fact that we can’t keep borrowing off it forever.”
Mr Darling has by contrast remained more cautious, saying yesterday: “I have consistently said that I did not see us returning to positive growth until the turn of the year.”
The Treasury is still hopeful that the ONS will revise its figures, and that they could yet show Britain growing in the third quarter.
But yesterday’s shock news means the Treasury faces re-examining the pre-Budget report which was expected to be delivered next month against a backdrop of positive growth. Mr Brown’s hints in a recent interview with the Daily Telegraph that the Budget forecasts could be revised upwards now look unlikely to be fulfilled, while the economy’s weakness may constrain Mr Darling’s ability to balance the budget in the coming years.
The news also raises the likelihood that the Bank of England may be forced to pump more money into the economy through its quantitative easing programme next month."
Oh dear Gordon, you and your stinking, rotting ilk really are not fit for purpose
at the Meltdown Clown and all his delusional incompetent Cabinet muppets.
at the economy and fabric of the UK he and Bliar systematically destroyed.
Targarama said:
Chris - please move back to blighty - we obviously need you ;-)
The sooner we get a new government in place and start undoing all the mess the better.
I spend over half my time in the UK! If and when we get a new governemnt, I'd like to move back, as I still prefer the UK, overall. The sooner we get a new government in place and start undoing all the mess the better.
MANUFACTURE! We have become too dependent on the financial and service sectors.
Italian and Italian owned companies manufacture and export high volume - medium to high value items such as cars, fashion goods, luxury food products and high quality household items such as tiles, sanitaryware, brassware and bathroom furniture.
Our own equivalent companies have either been bought out by foreign companies, disappeared or have outsourced much more of their manufacturing to China, Vietnam and Thailand with just the head office and administrative operations on U.K soil. What we do seem to manufacture here is very low volume - very high value product that is extremely vulnerable in a recession.
I have one example . One Italian brassware manufacturer I know of still makes the bulk of their product on home soil. Thy've always had a reputation for good quality and design and are quite highly priced. The equivalent British manufacturer that I know used to have a reputation for British made good quality brassware but in the past decade made a decision to target the contract market and outsourced the manufacture of their product to China. They have made a half-arsed attempt to get back into the premium retail market now their contract market has died. Their name means nothing to me now and I find I am selling ten times more Italian product than the British product.
Italian and Italian owned companies manufacture and export high volume - medium to high value items such as cars, fashion goods, luxury food products and high quality household items such as tiles, sanitaryware, brassware and bathroom furniture.
Our own equivalent companies have either been bought out by foreign companies, disappeared or have outsourced much more of their manufacturing to China, Vietnam and Thailand with just the head office and administrative operations on U.K soil. What we do seem to manufacture here is very low volume - very high value product that is extremely vulnerable in a recession.
I have one example . One Italian brassware manufacturer I know of still makes the bulk of their product on home soil. Thy've always had a reputation for good quality and design and are quite highly priced. The equivalent British manufacturer that I know used to have a reputation for British made good quality brassware but in the past decade made a decision to target the contract market and outsourced the manufacture of their product to China. They have made a half-arsed attempt to get back into the premium retail market now their contract market has died. Their name means nothing to me now and I find I am selling ten times more Italian product than the British product.
KANEIT said:
MANUFACTURE! We have become too dependent on the financial and service sectors.
Italian and Italian owned companies manufacture and export high volume - medium to high value items such as cars, fashion goods, luxury food products and high quality household items such as tiles, sanitaryware, brassware and bathroom furniture.
Our own equivalent companies have either been bought out by foreign companies, disappeared or have outsourced much more of their manufacturing to China, Vietnam and Thailand with just the head office and administrative operations on U.K soil. What we do seem to manufacture here is very low volume - very high value product that is extremely vulnerable in a recession.
I have one example . One Italian brassware manufacturer I know of still makes the bulk of their product on home soil. Thy've always had a reputation for good quality and design and are quite highly priced. The equivalent British manufacturer that I know used to have a reputation for British made good quality brassware but in the past decade made a decision to target the contract market and outsourced the manufacture of their product to China. They have made a half-arsed attempt to get back into the premium retail market now their contract market has died. Their name means nothing to me now and I find I am selling ten times more Italian product than the British product.
..But anything imported into Italy costs a lot more than locally produced products (tin of Heinz baked beans is over €2, for example) However, they do encourage buying locally, and if you can prove that what you sell is exported to both EU and non EU countries more than selling locally, you don’t have to pay VAT on the goods you buy to sell on! (which is good as the rate in Italy is 20%)Italian and Italian owned companies manufacture and export high volume - medium to high value items such as cars, fashion goods, luxury food products and high quality household items such as tiles, sanitaryware, brassware and bathroom furniture.
Our own equivalent companies have either been bought out by foreign companies, disappeared or have outsourced much more of their manufacturing to China, Vietnam and Thailand with just the head office and administrative operations on U.K soil. What we do seem to manufacture here is very low volume - very high value product that is extremely vulnerable in a recession.
I have one example . One Italian brassware manufacturer I know of still makes the bulk of their product on home soil. Thy've always had a reputation for good quality and design and are quite highly priced. The equivalent British manufacturer that I know used to have a reputation for British made good quality brassware but in the past decade made a decision to target the contract market and outsourced the manufacture of their product to China. They have made a half-arsed attempt to get back into the premium retail market now their contract market has died. Their name means nothing to me now and I find I am selling ten times more Italian product than the British product.
Ceramics , furniture and bathroom stuff is dirt cheap there too – but other stuff is expensive – it kind of evens itself out – but personal tax and NI rates are far far higher in Italy, especially if you earn over €40k.
chris watton said:
..But anything imported into Italy costs a lot more than locally produced products (tin of Heinz baked beans is over €2, for example) However, they do encourage buying locally, and if you can prove that what you sell is exported to both EU and non EU countries more than selling locally, you don’t have to pay VAT on the goods you buy to sell on! (which is good as the rate in Italy is 20%)
Ceramics , furniture and bathroom stuff is dirt cheap there too – but other stuff is expensive – it kind of evens itself out – but personal tax and NI rates are far far higher in Italy, especially if you earn over €40k.
I'm surprised furniture and bathroom kit is cheap there. Anything I deal in that's Italian is quite highly priced. I assume someone is making a lot of money out of the U.K market? If I work out a shopping list can you bring some stuff back please?!Ceramics , furniture and bathroom stuff is dirt cheap there too – but other stuff is expensive – it kind of evens itself out – but personal tax and NI rates are far far higher in Italy, especially if you earn over €40k.
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