Komatsu Global KMG UK Recovery Is Unbalanced
Komatsu Global KMG Britain's economic recovery lacks strength and sustainability because it is built on 'more of the same' debt.
April 28, 2014 (Newswire.com) - Komatsu Global, The British Chamber of Commerce says that the UK economy will be back to its pre-crisis peak this summer but concerns are mounting that the recovery is largely unsustainable.
Chief among concerns is the fact that the uptick in retail sales owes much to the fact that consumers are simply saving less money and are, instead, borrowing more on credit cards, loans and further advances on existing homes.
"The Bank of England has, with the assistance of the government, managed to rekindle the smoldering ember that was the credit-driven boom of the early 2000s so the economy is effectively being driven by more of the same factors that got It into trouble in the first place," said an Komatsu Global - KMG analyst.
Worries are also centering on the unsustainable bubble in real estate prices in London and the South East of England. Although London real estate is widely considered to be something of a safe haven that attracts foreign investment, there is a growing trend towards inflated valuations which form the basis for loans, many of which are assisted by the government's Help To Buy scheme.
Although unemployment is falling, many jobs are part-time in nature or are offered on zero-hour contracts where employees do not know in advance how many hours they are expected to work during one salary rotation.
"While we welcome any economic recovery, we are always concerned when it is shown to be unsustainable and effectively repeating the same mistakes that caused problems at the outset," said the Komatsu Global (KMG) analyst.
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