It is my belief that the British economy is far too reliant on the financial services sector. We have too many, if not all our eggs in one basket. Conventional wisdom suggests this is a high risk strategy.
I also believe that certain factors are looming which could destabilise financial markets. Rising consumer debt, rising bad debts to third world countries, increasing government indebtedness, a possible fall in house prices, collapsing pensions and falling consumer demand pose a serious threat to economic well being in the medium to long term. Add to this the war in Iraq and the ever present terrorist threat and it seems that no matter where you look, it is difficult to see any positives on the economic horizon as far as Britain is concerned.
These factors will have a serious impact on consumer confidence, equity markets and the banking sector. This in turn, will impact on business in general. Bankruptcies will increase, unemployment will rise, consumer spending will fall, culminating in a classic vicious circle scenario pushing the economy into free fall.
This is not some airy fairy doom and gloom scenario. These negative factors are clearly present for all with eyes to see and have been for 18-24 months now. Add to this the downturn in savings over the last few years and we are clearly heading for tempestuous waters.
Furthermore, Britain no longer has a manufacturing industry of any consequence producing goods with which we could trade our way out of trouble should financial markets wobble. Equally worryingly for different reasons is the fact that we no longer have an agricultural base capable of sustaining the country in times of crisis.
Germany, France, Japan, USA and even Italy and Spain have much more diverse economies than Britain, as do China and India. They are less dependent on financial and other service industries. This, I believe gives them an economic edge in the medium to longer term. I see absolutely no real awareness whatsoever of Britain's economic deficiencies in government circles. Blair and Brown continue to make believe all is well with everything. Meanwhile, those of us who do not wear rose tinted glasses, watch helplessly as manufacturing, agriculture and the fisheries industry shrink slowly but inexorably into non-existence.
The extended dot.com boom of the 90s coupled with rising house prices and low interest rates has encouraged and extended consumer borrowing and spending, for longer than would have been the case in previous economic downturns. It is this that has kept the British economy relatively strong but it cannot and will not go on forever. At some point the bills have to be paid and it is that point that the economy will start to unwind. Blair talks about developing a high tech economy but I see no concrete Government strategy in place to catalyse this revolution. Therefore any evolution in that direction is likely to be painfully slow and thus ultimately inadequate. Others will do it better and faster.
It is also a fact of economic life that booms are inevitably followed by busts and it is quite often the case that the bigger the boom, the bigger the bust that follows. I am thus extremely pessimistic about Britain's economic prospects in the medium to long term. I am also pessimistic about many other aspects of British life under this appallingly, shallow and incompetent government. Mark my words the chickens are coming home to roost. Well at least we will have something to eat, I suppose.