Bank's Fisher sees glimmers of hope for a flat UK economy

In an interview with the Herald, Bank of England director Paul Fisher has said that he sees "glimmers of hope" for an economy which has been "basically flat".

He said: "I expect North Sea oil at least to bottom out shortly and possibly start increasing and construction to be no worse than flat – that would in itself lead to some pick-up in GDP numbers."

(The Herald)

Allister Heath argues that those who believe the UK is likely to pick up soon are being overly optimistic:

Three key UK key sectors are dragging down the rest: finance, construction, and oil and gas. Their woes have helped to mask the limited growth in some stronger parts of the economy. Proper growth in at least two of these three areas would be essential to converting the current stagnation into modest expansion. The most likely first candidate for such a recovery is probably construction: there have been some very early indications that some of the coalition’s planning reforms might finally be starting to have an effect, but it remains too soon to come to a firm conclusion.

The reality is that the UK economy is set for a lengthy period of almost unbearably weak growth. We will crawl along for the next few years, dragged down by a range of factors that include high inflation that is eroding real wages and savings, financial repression which is diverting resources into financing the state, an overhang of bad debt, an ultra-leveraged overall economy, a crazy planning system and other disastrous red tape, a high tax and government spending burden, a decision to make energy far more expensive than it needs to be, a regulatory-imposed squeeze on bank balance sheets and a continued onslaught on the City. Under such circumstances, sustained and genuinely strong growth – and I’m not referring to the odd jump in output – is simply impossible.

(Full article)