William Gross, head of the world’s largest bond manager giant PIMCO, has
triggered a storm by saying that, among the countries to flee because of
their excessive debt, the greatest risk is Great Britain, which “rests on a
nitroglycerin bed.” Actually, there are reasons for concern: the country’s
total debt is the highest in the world with that of Japan; and the national
debt alone will reach 100 % of the GDP in 2014. The British economy
entered into recession in the second quarter of 2008, remaining the only G7
country not able to come out of it, despite the strong devaluation of the
pound, the enormous loans and the low interest rates, the lowest in more
than three centuries. The expected growth rate for 2010 will be 1% at best.
Consequently, unemployment could reach 10% this year although Great
Britain is with Germany the only developed country where productivity
dropped in 2009. This loss of industrial dynamism is also translated by the
sale of British industry flagships abroad. Thus, Birmingham, the mythical
industrial capital, just lost Cadbury, sold to the American Kraft, after
losing Rover; Even the British banks are no longer part of the more stable
and safer world Bank Group and are relegated, according to rating agency SP,
in the third category. Finally, after more than a decade of Labor
Government, the richest 10 % still have wealth a hundred times higher than
the poorest 10 %, which is the highest ratio in 40 years.
Moreover, everyone knows that after the elections whatever the outcome, an
austerity plan will be carried out. Although all parties deny it, more or
less skillfully, as the conservatives, who thought with assurance until
recently about some easy victory, and, seeing according to recent
polls, a risk for a tighter outcome , are taking a backward step.
And an austerity plan obviously will mean less growth, more unemployment and
threats to the public health system and all public infrastructures.
More still maybe, it is the confidence in itself for Great Britain which is
fundamentally affected: less than half of the population, increasingly
communautarized, believes that “British Is best”; whereas 15 years ago, 63%
of the English were convinced.
However, Britain still has many assets. As we enter a society of
intelligence, it remains the matrix of the language of business and
innovation. In the Shanghai rankings, there are four English universities
among the top 25, and Great Britain is still the second largest country in
terms of Nobel prizes in Science. The city of London remains the global city
par excellence, with an unique concentration of creative activity,
innovation and architectural arts and with a multiculturalism almost unique in
So Great Britain should not be buried too quickly. As it showed so
often in its history, it could react very quickly, if those who aspire to
manage it succeed in recreating a feeling of national urgency; this is the
main issue of the campaign that begins. Other countries would do well, also,
to think about it.