The gloomy warnings will send a stark reminder to chancellor George Osborne ahead of tomorrow’s Autumn Statement of the growth challenges facing Britain and its debt pile.
Bank of England policymaker Andy Haldane told the BBC yesterday the economic crisis had been as devastating as a world war. “If we are fortunate, the cost of the crisis will be paid for by our children. More likely it will still be being paid for by our grandchildren,” he said.
One of the UK’s top business leaders was equally glum. “In western Europe we may just be halfway through a lost decade,” WPP boss Sir Martin Sorrell told Management Today.
Sir Martin warned that the outlook was inspiring an exodus of workers from western Europe.
“We’ve got really good people in excellent companies there who are asking to go to Brazil or India. Our people in Spain and Italy are depressed by the stubborn lack of growth,” he said.
Despite an aggressive push to delever across the developed world, the ratio of private and public debt-to-GDP for G7 countries has risen further, jumping from 385 per cent on average in 2007 to 415 per cent today.
“This crisis has not even started,” Jamil Baz, partner at hedge fund GLG, said yesterday.
“A country cannot delever by more than 10 per cent a year without a great risk of social dislocation and great risk to political harmony. Even if these countries delever diligently year in year out, it will take more than 20 years to go back to a reasonable ratio.”
Meanwhile, Scotiabank predicted that the longer-term growth rate in Britain would turn out to be much lower than expected.
It said the UK economy would grow at a lower rate of 1.25 per cent to 1.5 per cent a year from 2014, lower than the three per cent predicted by the Office for Budget Responsibility for 2015-16.
The UK PMI manufacturing survey yesterday added to the pall, coming in at 49.1, a level that suggests continued contraction in the sector.