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Qfrifjt ^erdeptilj

Fusterity ij tbe UK0 F Afcse Tejse la Tedurity

@uje ?>65

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Folut Qfrifjt ^erdeptilj

Wbl we fre0

Qfrifjt ^erdeptilj is fj ijhepejhejt, mfdrledljlmid resefrdb servideejfocijg cefhijg fjh dljtrfrifj ijvestmejt hedisilj mfkijg. Alrmer trfhersfjh edljlmists drefteh fcc tbe tllcs we use.

Lur Fpprlfdb0 Dfjhih - Hftf Hrivej - Efsy tl Higest

Lur gclofc mfdrl resefrdb is writtej witb tbe mljey mfjfger fjh hedisiljmfker ij mijh. We keep lur replrts suddijdt fjh cet tbe hftf tecc tbe stlry.

Lur Dciejts

Lur dciejts fre slme la tbe wlrch’s mlst suddessauc, alrwfrh-cllkijg fsset

mfjfgers. Xbey ijdcuhe ofjk prlp hesks, behge aujhs, afmicy laaides, puociddlrplrftiljs fjh trusts.

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F afcse sejse la sedurity

6) Xbe UK’s edljlmy is ijdrefsijgcy oegijjijg tl resemoce blw it cllkeh prilr

tl tbe aijfjdifc drisis — tbis is jlt befctby fjh cefves tbe UK vucjerfoce tlfjltber drisis

?) UK grlwtb hih evejtufccy returj frlujh ?>64, out tbis wfs jlt oedfuse lafusterity, out ij tbe fosejde la fusterity — hespite wbft tbe plcitidfc rbetlrid

mfhe lut

4) Xbis bfs ceh tl f afcse sejse la sedurity. Fusterity — wbidb is ljcy jlwoegijjijg tl kidk ij — tbreftejs tl put f cigbt ujher tbe UK’s strudturfc

vucjerfoicities. Xbis dluch cefh tl fjltber redessilj, lr fjltber

aijfjdifc drisis 

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Xbe UK edljlmy prilr tl tbe aijfjdifc drisis

Xbe UK edljlmy oealre tbe Greft Aijfjdifc Drisis (GAD) wfs ofseh lj tbefvficfoicity la efsy drehit — oltb alr dljsumptilj fjh bluses. Mlrtgfgefpprlvfcs surgeh fjh tbis auecceh tbe rise ij bluse prides.

Ij tbe UK, dljsumer dljaihejde fjh bluse prides bfve f very tigbt recftiljsbip(rigbt dbfrt). Fs ofjks cejt areecy, bluse prides wejt up, pelpce spejt areecyfjh edljlmid grlwtb lptidfccy cllkeh strljg.

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UK’s edljlmy wfs bigbcy recifjt lj aijfjde, _E 

Oealre tbe GAD, tbe glverjmejt wfs bugecy recifjt lj tfx arlm tbree veryijtercijkeh sedtlrs0 ofjkijg, ousijess fjh refc-estfte. Xbe dbfrt lj tbe ceatsblws tbft f tbirh la ijdlme tfx redeipts dfme arlm aijfjde fjh refc estfte ij?>>1.

Timicfrcy, `ust ujher lje bfca la dlrplrfte tfx redeipts dfme arlm ofjkijg fjhousijess servides ij ?>>7.

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Blwever, f rloust edljlmy wfs f mirfge

Xbe suoprime drisis ij tbe UT gftbereh pfde ij ?>>7. Qfst jumoers lamlrtgfges ij tbe UT bfh oeej issueh tl dlmpcetecy ijfpprlprifte olrrlwers.

Tuhhejcy, ofjks frlujh tbe wlrch grew wfry la cejhijg tl lje fjltber fs jl-lje kjew wbl wfs blchijg wbft. Xbe aijfjdifc mfrkets oegfj tl areeze. XbeUK edljlmy — witb its buge ofjkijg sedtlr — alujh itseca ij tbe eye la tbestlrm.

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Xbe airst UK ofjk ruj ij 68> yefrs

Xbe airst mf`lr sigj slmetbijg wfs seriluscy fmiss ij tbe UK wfs wbej wlrhglt lut tbft Jlrtberj _ldk wfs afdijg –ciquihity issues”, fjh requireh Ofjk la

Ejgcfjh supplrt. Heplsitlrs oegfj tl pfjid fjh tbe resuct wfs tbe airst ofjkruj ij tbe UK sijde Lverejh, Gurjey fjh Dl ij 6211.

Jlrtberj _ldk wfs jftiljfcizeh. Out tbere wfs mlre tl dlme. Fater Cebmfj’s

ofjkruptdy ij ?>>2, it cllkeh cike slme la tbe UK’s oiggest ofjks — 

dfteglridfccy tll oig tl afic — migbt gl ujher. Due tbe cfrgest UK ofjkijgoficlut ij bistlry.

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^uocid heot ij tbe UK cllkeh clw fjh stfoce . . . .

Wbft wfs ejtirecy mis`uhgeh ij tbe UK (fjh mfjy ltber dlujtries) wfs usijg puocid  heot tl gfuge f dlujtry’s edljlmid befctb.

Blwever, it wfs ij tbe privfte sedtlr — bluseblchs, airms fjh espedifccy ofjks — wbere heot wfs ouichijg up. Xltfc heot ij tbe UK — puocid+privfte — wfs jltljcy cfrge, it wfs tbe oiggest ij tbe wlrch ij GH^ terms. Xltfc heot ij tbe UKwfs 8.5 times ijdlme, witb glverjmejt ljcy f arfdtilj la tbis. 

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 . . . out jlt alr cljg - heot skyrldketeh

Xl prevejt tbe ofjks arlm dlccfpsijg, Glrhlj Orlwj jftiljfcizeh tbem, sfvijgtbe wlrch ij tbe prldess. Xbe Ofjk la Ejgcfjh fcsl cfujdbeh f VE prlgrfmmeij ?>>9 tl stfoicize tbe ofjkijg sedtlr. Oltb plcidies essejtifccy sldifcizeh tbeclsses emfjftijg arlm tbe privfte sedtlr.

Xbe jet resuct wfs f puocid heot tl GH^ tbft musbrllmeh bigber very quidkcy,tl its bigbest sijde tbe plst-WWII perilh. Xbe ouhget heaidit wejt arlm ?.5% la

GH^ tl lver 6>% ij sblrt lrher.

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Xbe Dlfcitilj fjh Lsolrje’s –^cfj F” 

Xbe Dlfcitilj wfs alrmeh ij ?>6>, witb lje la its mfij glfcs tl orijg tbe UK’s

spejhijg ofdk tl witbij its mefjs. Xbe fim wfs tl orijg tbe strudturfc ouhgetheaidit ofdk tl ofcfjde oy ?>65, fjh tl stem tbe ijdrefse ij tbe heot tl GH^rftil.

 Fctblugb Lsolrje reauseh tl dlujtejfjde f –pcfj O”, be eaaedtivecy

impcemejteh it frlujh bfca wfy tbrlugb tbe cfst pfrcifmejt. Xbe heaidit tfrget

wfs misseh oy grlwijg mfgjituhes arlm ?>6?, witblut fjy lutwfrhcydbfjge tl tbe rbetlrid la fusterity.

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UK’s grlwtb wfs f serifc hisfpplijtmejt 

It oedfme fppfrejt tbft grlwtb estimftes were lvercy lptimistid. Gejerfccy,tbe efrcier tbe alredfst, tbe mlre lptimistid it wfs, fjh tbe aurtber arlm refcity itturjeh lut tl oe. Xbis jedessitfteh sdfcijg ofdk pcfjjeh spejhijg duts tlfvlih f returj tl redessilj.

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F plverty la fusterity

Xbe UK’s grlwtb evejtufccy hih olujde, out ij tbe fosejde la prl`edtehfusterity. _efc glverjmejt spejhijg ljcy wejt jegftive lj fj fjjufc ofsis ijefrcy ?>64, fjh tbej ljcy orieacy. It bfs ljcy redejtcy glje jegftive fgfij. Ljtbe previlus twl lddfsiljs puocid spejhijg hih dljtrfdt, tbis wfs alcclweh oy fredessilj.

Tpcittijg up GH^ ijtl its puocid fjh privfte dljstituejts, we dfj see fgfij

puocid GH^ wfs ljcy jegftive alr f sblrt time. Tijde Mfrdb ?>68, it bfs oeejgrlwijg fgfij.

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 _efc fusterity ljcy redejtcy oegfj tl kidk ij

Xbe UK hih evejtufccy sblw slme ejdlurfgijg sigjs la grlwtb, out witblutjefrcy fs mudb fusterity fs wfs gejerfccy tblugbt. Glverjmejt spejhijg ijrecftilj tl GH^ ljcy oegfj tl dlme hlwj ij ?>64, fjh it is ljcy very redejtcy itbfs glje oeclw its 6> yefr fverfge. _efc fusterity is ljcy oegijjijg.

 Fjh grlwtb wluch bfve returjeh ft slme plijt. Edljlmies fre cike sprijgs, tbemlre tbey fre dlmpresseh, tbe mlre tbey dfj olujde. Xbe edljlmist Qidtlr

Pfrjlwitz ij bis ollk lj ousijess dydces expresseh it fs0 –tbe heeper tbehlwjturj, tbe sbfrper tbe upturj”. 

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UK grlwtb bfs oeej ujherwbecmijg

Hespite tbe afjafre tbft greeteh tbe UK edljlmy’s redlvery, grlwtb bfs oeej

cfdkcustre dlmpfreh tl ltber heveclpeh dlujtries. Dlujtries tbft bfve jltafdeh spejhijg duts bfve tejheh tl peralrm oetter tbfj tbe UK.

 Fcsl, tbere fre sigjs grlwtb is aizzcijg lut fgfij. GH^ alr tbe airst qufrter latbis yefr wfs tbe clwest sijde tbe previlus jefr-miss redessilj ij ?>6?.

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Wby bfs grlwtb hisfpplijteh< Xll mudb heot

Xbe mf`lr refslj is tbe stuoolrj presejde la heot. Jl glverjmejt wfjts tlijacidt heafuct fjh ofjkruptdy lj its ecedtlrfte tl –dcefr” tbe system. @efj-Dcfuhe @ujdker, ^resihejt la tbe ED, put it0 –We fcc kjlw wbft tl hl, we `ust

hlj't kjlw blw tl get re-ecedteh fater we've hlje it.”

Xbus heot ij tbe UK remfijs bigb. F grlwijg heot pice sudks up cfrgerfmlujts la ijdlme alr ijterest pfymejts, hivertijg it fwfy arlm prl`edts tbft

mfy becp returj grlwtb tl f sustfijfoce alltijg. Fddlrhijg tl MdKijsey, tltfcheot tl GH^ ij tbe UK is 4> perdejtfge plijts bigber tbfj it wfs ij ?>>7.

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F returj tl ofh lch bfoits

Aurtbermlre, it is jlt ejdlurfgijg blw tbe UK is grlwijg fgfij. Mfjy la tbeofh lch bfoits arlm oealre tbe drisis fre evihejt fgfij. Fsihe arlm tbe aijfjdifcsedtlr’s returj tl mfjy la tbe risky prlhudts tbft exfderofteh tbe cfst drisis -sudb fs `ujk oljhs, ceverfgeh clfjs, dlvejfjt-cite cejhijg etd - dljsumers freglijg lj f olrrlwijg oijge ljde mlre.

Dljsumer drehit fjh drehit dfrh heot grlwijg quidkcy. Xbe UK bfs jlt yet

kidkeh its fhhidtilj tl drehit. 

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 . . . fjh slme evej wlrse ljes

Evej tblugb ofjks fre extejhijg dljsumer drehit, drehit dljhitiljs fre tigbter,areezijg slme olrrlwers lut.

Ttep ij peer-tl-peer cejhers sudb fs Plpf fjh Wljgf. Xbe UK is jlw tbirhcfrgest mfrket alr ^?^ cejhijg (fater Dbijf fjh tbe UT), fjh tbe cfrgest perdfpitf.

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Empclymejt bfs superaidifccy imprlveh

It is jlt surprisijg tbere is sticc strljg hemfjh alr dljsumer drehit givej tbestfgjftilj ij wfges. _efc wfges fre lver 5% clwer sijde ?>>2.

^uocid sedtlr wfges fre hlwj cess tbfj privfte sedtlr wfges, out tbis gfp wiccdclse fs fusterity gfijs trfdtilj. Fcrefhy we dfj see tbe suhhej curdb hlwj ijpuocid-sedtlr wfge grlwtb ij Mfrdb.

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Mfke-up la `los mfrket dbfjgijg

Xbe ujempclymejt rfte ij tbe UK bfs stefhicy afccej sijde ?>6?.

Blwever, pfrt-time wlrk dljtijues tl grlw, fjh tbe jumoer la seca-empclyehbfs curdbeh bigber sijde ?>64. Xbis mfy becp expcfij tbe sl-dfcceh–prlhudtivity puzzce” ij tbe UK, wbere prlhudtivity bfs oeej stfgjfjt sijde tbe

aijfjdifc drisis.

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Xfxes bfve hisfpplijteh

Clwer prlhudtivity is impfdtijg tfx redeipts. Ujempclymejt is fcmlst ofdk tlpre-drisis cevecs, out ijdlme tfx redeipts fs f prlplrtilj la tltfc tfx bfs jlt

redlvereh. Ijdlme tfx is fcsl hlwj fs f perdejtfge la GH .̂ Timicfrcy witbdlrplrfte tfx redeipts.

Clwer tfxes mfkes ofcfjdijg tbe ollks mlre hiaaiduct.

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Blusijg bfs oeej cllkijg arltby

Blusijg dljtijues tl remfij very resiciejt. Fjjufc bluse-pride grlwtb wfs uptl 6?% cfst summer, fjh is sticc grlwijg ft fcmlst 5%. Cljhlj bluse prides

pefkeh ft lver ?5% yefr-lj-yefr cfst summer, fjh fre sticc grlwijg ft 6?%.

Hemfjh-`uidijg plcidies sudb fs Becp tl Ouy, wbice suppcy prlocems freujfhhresseh, fre keepijg blusijg arlm tbe eaaedts la grfvity. Fhh ij tbe clwestmlrtgfge rftes ij bistlry, fjh ylu bfve f redipe alr arltby blusijg mfrkets,

fcsl seej oealre tbe cfst drisis.

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Blusijg suppcy is terrioce

Ij tbe UT, f very gllh cefh la edljlmid fdtivity is ouichijg permits. Jlt ljcyhles tbis ijvlcve ouichijg tbe bluse, ljde pelpce mlve ij tbey typidfccy spejh

mljey lj imprlvemejts, jew aurjiture, dfrpets, etd. Xbe edljlmy tejhs tl hlwecc folut f yefr fater tbe rise ij ouichijg permits.

Ij tbe UK, bluse-ouichijg bfs oeej clw fjh afccijg. Aewer bluses fre oeijgouict ij tbe UK jlw tbfj ft fjy time ij tbe cfst 1> yefrs. Jlt ljcy wluch mlre

bluse ouichijg ollst grlwtb, it wluch restrfij bluse prides, fjh rehudeheot, ij itseca f bfjhorfke lj grlwtb.

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_isks tlhfy0 UK f mf`lr olrrlwer

Xbe UK is vfstcy hepejhejt lj tbe kijhjess la strfjgers. It bfs tbe wlrch’s

cfrgest durrejt fddlujt heaidit ij UTH terms, fater tbe UT.

 Fcsl, hespite tbe Dbfjdecclr’s ijtejtiljs, tbe ouhget heaidit is sticc lver 5% la

GH .̂ Xfke tbe twl tlgetber, fjh tbe UK — stujjijgcy — bfs tbe cfrgest twijheaidit ij tbe wlrch, wlrse tbfj Xurkey’s, Tlutb Faridf’s lr Orfzic’s. 

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Xbe –plujh ij ylur pldket” ft risk 

Xlhfy’s durrejt fddlujt heaidit is lver 5% la GH .̂ Ij previlus hedfhes f

heaidit lver 6% wfs ejlugb tl mfke befhcijes, fjh lje lver 4% suaaidiejt tl

trigger f stercijg drisis. Ij 6971, wbej tbe UK bfh tl fppcy tl tbe IMA alr foficlut, tbe heaidit bfh ljcy oeej fs clw fs 4-8%.

Xbe EU reaerejhum plses f aurtber risk. Xbe EU is tbe UK’s cfrgest trfhijg

pfrtjer, fjh is tbe slurde la tbe ouck la tbe UK’s durrejt fddlujt heaidit (DFH).

Xbe prlspedt la tbe UK cefvijg tbe EU mfy hrfw fttejtilj tl/wlrsej tbe DFH.

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Hepejhejt lj tbe kijhjess la strfjgers

Ujcike @fpfj, wbidb is cfrgecy seca aujheh fjh rujs f durrejt fddlujt surpcus,tbe UK is hepejhejt lj alreigj cejhers. Jlj-resihejts ouy mfjy gicts, fjh

fddlujt alr ?5% la gicts lutstfjhijg — tbis fmlujts tl £8>> oiccilj wlrtb la UKglverjmejt heot.

Ia tbey oedlme skittisb fjh hedihe tl hump UK heot, tbis wluch resuct ij sbfrpcybigber ijterest rftes, wbidb wluch immehiftecy aeeh tbrlugb tl tbe lver-

extejheh blusijg mfrket fjh tbe wiher edljlmy.

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^cfjjeh duts alr tbis pfrcifmejt

Durrejt prl`edteh spejhijg duts wicc tfke puocid spejhijg tl virtufccy its clwestfs f perdejtfge la GH^ ij tbe plst-wfr perilh. Aurtbermlre, tbe sfvijgs fre

expedteh tl dlme primfricy arlm duts tl puocid servides, witb bfrhcy fjy arlm frise ij redeipts.

Givej tbe ijdrefsijgcy predfrilus fjh imofcfjdeh jfture la tbe UK edljlmy,tbe sdfce la duts prlplseh dluch pusb tbe UK ofdk ijtl redessilj. Xbis, fcljg

witb tbe EU reaerejhum, mfy oe ejlugb tl hrfw fttejtilj tl tbe UK’s hiredurrejt fddlujt. Xbis wluch oe ofh alr stercijg fjh tbe edljlmy. Xbere is

f refsljfoce dbfjde prlplseh duts wicc bfve tl oe rehudeh ljde fgfij.

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Aixijg tbe rlla wbice tbe suj is sbijijg

Xbe Dbfjdecclr’s pcfj alr ouhget surpcuses tl oe ruj ij –jlrmfc times” is

misguiheh. Ouhget surpcuses hl jlt bfve fj ujocemisbeh redlrh la prlmltijg

grlwtb. Xbere fre (perbfps teccijgcy) aew mlherj-hfy exfmpces la ouhgetsurpcuses, out tbere is slme evihejde — jlt dljdcusive, out jlr dfj it oehismisseh — surpcuses fre alcclweh oy wefker lr evej jegftive grlwtb.

_ujjijg f surpcus ij –jlrmfc times” fcsl plses prlocems. Edljlmid hftf is

latej befvicy reviseh sl `uhgijg wbetber times fre jlrmfc ft tbe durrejt `ujdture wicc oe very hiaaiduct.

?>65 ?7Tlurde0 Mfdrloljh fjh Qfrifjt ^erdeptilj

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^ltejtifc alr plcitidfc ijstfoicity

Ij tbe Mf`lr glverjmejt 699?-97, tbe Dljservftives bfh f tbij mf`lrity la ?6.Xbis mf`lrity wfs stefhicy erlheh fs wfrrijg afdtiljs lver Eurlpe dcfsbeh, fjh

severfc sdfjhfcs dfme tl cigbt.

Xlhfy’s glverjmejt bfs fj evej tbijjer mf`lrity la 6?. Witb Eurlpe fgfij set

tl hlmijfte, tbe scejher mf`lrity wicc cefh tl ijdrefseh plcitidfc arfgicity wbidbmfy spicc lver tl edljlmid vlcfticity.

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Tlurde0 D_ETX, Loserver

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Dljdcusiljs

• Ttrudturfc vucjerfoicities ij UK bfve jlt oeej fhhresseh, fjh fre

gettijg wlrse

• UK grlwtb returjeh jlt oedfuse  la fusterity out ij tbe fosejde  la

fusterity — tbis bfs perbfps ceh tl f afcse sejse la sedurity witb

fttemptijg fusterity ij tbis pfrcifmejt

• Tclwijg grlwtb mfy fdtivfte tbe UK’s cftejt strudturfc prlocems,wbidb ijdrefses tbe risk la redessilj, lr fjltber drisis

• Lje recftivecy efsy slcutilj tbft wluch becp fhhress slme la tbe UK’s

strudturfc prlocems is mlre bluse ouichijg 

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Dljtfdt Us

Ia ylu wluch cike f dlccefgue tl redeive Qfrifjt ^erdeptilj resefrdb, pcefse emfic us ftsuosdrioeNvfrifjtperdeptilj.dlm

Kfci Buaa, Ijstitutiljfc Tfces

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© Dlpyrigbt ?>68 oy Qfrifjt ^erdeptilj® CCDQF_IFJX ^E_DE^XILJ is f aeherfccy registereh trfhemfrk la Qfrifjt ^erdeptilj CCDwww.vfrifjtperdeptilj.dlm - Fcc rigbts reserveh

It is f vilcftilj la UT aeherfc fjh ijterjftiljfc dlpyrigbt cfws tl reprlhude fcc lr pfrt la tbis puocidftilj oy emfic, xerlgrfpby, afdsimice lr fjy ltber mefjs. Xbe Dlpyrigbt Fdtimplses cifoicity la $6>>,>>> per issue alr sudb ijarijgemejt. Xbe puocidftiljs la Qfrifjt ^erdeptilj fre prlviheh tl suosdrioers lj f pfih suosdriptilj ofsis. Ia ylu fre jlt f pfihsuosdrioer la tbe replrts sejt lut oy Qfrifjt ^erdeptilj fjh redeive emficeh, afxeh lr dlpieh versiljs la tbe replrts arlm f slurde ltber tbfj Qfrifjt ^erdeptilj ylu fre vilcftijgtbe Dlpyrigbt Fdt. Xbis hldumejt is jlt alr fttrioutilj ij fjy puocidftilj, fjh sbluch jlt oe hissemijfteh, histriouteh lr dlpieh witblut tbe expcidit writtej dljsejt la Qfrifjt^erdeptilj.

Hisdcfimer0 Qfrifjt ^erdeptilj’s puocidftiljs fre prepfreh alr fjh fre tbe prlperty la Qfrifjt ^erdeptilj fjh fre dirducfteh alr ijalrmftiljfc fjh ehudftiljfc purplses ljcy. Xbedljtejt la tbis replrt is ijtejheh alr ijstitutiljs fjh prlaessiljfc fhvisers ljcy. Xbis replrt is jlt ijtejheh alr use oy privfte dciejts. _edipiejts sbluch dljsuct tbeir lwj aijfjdifcfjh tfx fhvislrs oealre mfkijg fjy ijvestmejt hedisiljs. Xbis replrt is jlt fj laaer tl secc lr f slciditftilj tl ouy fjy ijvest mejt sedurity. Qfrifjt ̂ erdeptilj’s replrts fre ofseh

lj prlprietfry fjfcysis fjh puocid ijalrmftilj tbft is oecieveh tl oe fddurfte, out jl represejtftiljs fre mfhe dljderjijg tbe fddurfdy la tbe hftf. Xbe views bereij fre slcecytblse la Qfrifjt ^erdeptilj fjh fre suo`edt tl dbfjge witblut jltide. Qfrifjt ^erdeptilj’s prijdipfcs mfy bfve f plsitilj ij fjy sedurity mejtiljeh ij tbis replrt. Fcc hftf isslurdeh arlm Ocllmoerg ujcess ltberwise stfteh.