Recovery

The UK economy has continued to grow in the first quarter, but by a tiddly amount, confirming the dampened state of economic activity and the remaining threat of another dip. There are encouraging signs of a revival of British manufacturing and the G20 Finance Ministers meeting in Washington think that worldwide recovery is moving faster than they expected. There is clearly good news here, even if optimism must be cautious.

The hidden problem which nobody really faces up to at any level is the fact that the crash came from too much borrowing in the first place. By borrowing their way out of it, Governments now add their own vast debts to those of individuals and the private sector. Greece shows what happens when the burden becomes unmanageable. We have yet to see whether the overall burden now carried at every level of the Western Economies can be both serviced and repaid without a savage fall in living standards for everyone.