CHICAGO, March 11 (Reuters) – Despite all the evidence to
the contrary, I am bullish on John Bull. Although Britain’s
economy is struggling, it may be poised for a decent long-term
rebound, but not for the usual reasons.
The struggles are evidenced by recent news out of London
that the British Chambers of Commerce lowered their economic
growth forecast for 2013 to 0.6 percent from 1 percent. That is
below the 1.2 percent rate predicted by the Office for Budget
Responsibility, which is considered an official prediction.
I saw this stagnation in action when I visited London and
Cambridge recently, and noticed a lot of empty restaurants.
Service employees told me there was little new work at a time
when immigrants from ailing European Union countries such as
Greece, Italy and Portugal were still trickling in for the few
low-skilled jobs available. One local business owner told me the
economic climate in the city is dour.
There is more bad news when you consider that Moody’s
recently downgraded Britain’s credit rating and that the Bank of
England said it was not augmenting its Federal Reserve-like
quantitative easing policy for now. The pound has been one of
the poorest-performing currencies against the dollar this year.
And more budget cuts are being contemplated as part of a series
of austerity measures imposed by Prime Minister David Cameron’s
POTENTIALLY BRIGHTER FUTURE
Although the possibility of a British recession is not off
the table, there are reliable forecasts that have the British
economy in positive territory for this year and into next year.
According to independent outlooks compiled by the British
Treasury last month, GDP growth rates may hover around 1 percent
this year and climb to 1.6 percent in 2014.