“The money has run out, now we must start to think!” is an old adage which seems to have been followed by those many countries running public sector deficits for years; only now, when the money truly has run out, are they starting to think about what needs to be done.
This article was written for the recent launch of a new unified marketing approach by the Isle of Man Government’s Department of Economic Development. The views expressed and all errors and omissions are the sole responsibility of the author. There follows a brief summary of the economic conditions in the Eurozone and the United Kingdom with an outline of the Isle of Man’s position.
The Isle of Man is now less dependent upon the UK than previously but the close correlation between economic activity there and the Isle of Man persists. In a nutshell, the UK economy is in recession and a brief look at the main components of aggregate demand gives few grounds for optimism:
Having run large annual public sector deficits since 2000, the UK Government, business and personal sectors are now reducing their debts. This de-leveraging, along with inflation and the depressed Eurozone, means that it will be many years before there can be any real growth in the United Kingdom.
There are few reasons to be optimistic about the future of the unbalanced and dysfunctional EU economy; election results in Greece and France add to the uncertainty and the likelihood of structural changes in the Eurozone. Electorates have shown that they do not like and will not accept austerity as the sole answer to economic problems; there must be realistic growth strategies if spreading discontent is to be averted.
I could continue at length with this list of negative factors but I hope I have made the point; the future does not look too bright for the EU! The second part of this article considers the position of the Isle of Man in the face of the economic uncertainties.