Has the UK economy been structurally damaged?
As the full extent of the UK economic downturn and the damage this has had upon UK public sector finances becomes more evident there are concerns that the structural damage to the UK economy could last well into the future. We has seen a massive change in the make-up of the financial sector and the excessive risk averse nature of current bank policies is impacting massively upon the small, medium and large business arenas. So when will the UK economy revert back to normal?
Those who believe that the economic troubles of today are nothing but a repeat of the boom and bust times of years gone by will be sadly mistaken. The UK economy which we see today is very different to the one we saw two years ago and indeed the UK economy in two years time will be very different again. How long these changes last remains to be seen but the repercussions of the taxpayer led bailout of the UK banking arena will reverberate for many years to come.
Many UK businesses, relatively strong but possibly in need of short-term finance, will struggle to survive over the next two years and failure rates will rise again. Even if it looks as though the worst is over there are many issues which have yet to rise to the surface.
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