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Is UK's recovery for real?

Monday, September 09, 2013 - 02:21

Sept 09 - Finance minister George Osborne says Britain's ecoomy has turned a corner, vindicating his austerity programme. But as David Pollard reports some question the strength of the recovery.

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Britain feels good again. At least, sellers in the housing market - the country's traditional economic proving ground, think so. They've seen prices rise over 5 per cent in the last year, far more in London, as demand outstrips supply and bids outstrip expectations. Retail sales are also up nearly four cent, car sales over ten, as services and manufacturing join the fun... The OECD toasted the news with a healthy, upwardly revised 3.5 percent growth forecast in the second half of the year. For Finance Minister George Osborne, it's all armour against opposition fire that the UK has been crippled by his austerity policies. SOUNDBITE: George Osborne, UK finance minister, saying (English): ''We held our nerve when many told us to abandon our plan, and as a result, thanks to the efforts and sacrifices of the British people, Britain is turning a corner.'' Even the main opposition Labour Party has welcomed the signs of recovery. But, they also see suffering from low or no wage growth and high living costs. Retailers warn that low spending and consumer caution have become the norm. John Rogers is Chief Financial Officer at Sainsbury's. SOUNDBITE: John Rogers, Sainsbury's Chief Financial Officer, saying (English): "Many of the behaviours that consumers have evidenced over the last two, three years or so aren't necessarily behaviours that will naturally reverse upon any form of economic recovery." The price of fuel - as the Syrian crisis threatens to choke oil supply - could yet spoil the mood. And whilst employment has picked up, many voice concerns over the shift towards part-time and 'zero hour' contracts - where workers have no guarantees over hours or pay. HSBC's Daragh Maher also has concerns over the strength of the pick-up. SOUNDBITE: Daragh Maher, FX Strategist, HSBC, saying (English): ''You can point to the data, but the reality is, is it strong enough to get the fiscal side improving, because that's really not been happening as yet, and is it strong enough to get the unemployment rate down at the kind of speed that the markets want, and that's what we're waiting for.'' UK employment data is next under the spotlight - with some expecting a tick down in the jobless rate from 7.8 per cent. Watching closely from the Bank of England will be governor Mark Carney. Anything more than a tick down may well force him to rethink a pledge to keep bank rates on hold ... ... that, in turn, raising fears of an unwelcome comeback from the age old enemy, inflation.

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Is UK's recovery for real?

Monday, September 09, 2013 - 02:21