UK economy now ‘doomed’ if Tories do not own up to Brexit mistake says prominent businessmen
The chairman and chief investment officer of one of the UK’s largest private equity firms, has said the UK’ economy is “doomed” unless the UK Government changes course.
Guy Hands of Terra Firma said that the Conservatives have put the UK on the path to becoming “the sick man of Europe” and that poverty would impact on the “whole of society”.
Speaking to BBC Radio 4’s Today programme, he was asked if the Tory Party is fit to run the country and attract investment to the UK.
He replied: “No, to be quite blunt. I think it’s got to move on from fighting its own internal wars and actually focus on what needs to be done in the economy and admitting some of the mistakes they’ve made in the last six years, which have, frankly, put this country on a path to be the sick man of Europe.”
He added: “The reality is, when they did Brexit, they had a dream, and the dream was a low-tax, low-benefit economy.
“(Liz) Truss, to be fair to her, tried it. It clearly isn’t something that’s acceptable to British people – the British people have never voted, or even shown any inclination to vote, for the sort of extreme Thatcherism that Brexit needed.
“Once you accept that you can’t actually do that, then the Brexit that was done is completely hopeless and will only drive Britain into a disastrous economic state.
“So, I think, if the Tory Party can own up to the mistakes they made in how they negotiated Brexit and have somebody leading it who actually has the intellectual capability and the authority to renegotiate Brexit, there is a possibility of turning around the economy, but without that the economy is, frankly, doomed.”
‘Whole of society’
He warned of worsening economic conditions and the spread of poverty “across the whole of society”.
The UK could face “steadily increasing taxes, steadily reducing benefits and social services, higher interest rates, and eventually the need for a bailout from the IMF like we were in the ’70s,” he said.
“I think the reality is, if you’re a businessman, you have to speak positively,” he said.
“I’d say 70% of my investments are in the UK and I have to try and be positive about it from a business perspective, but, from an honesty perspective, and in terms of what I actually see out there, the increasing levels of poverty in the UK, and it’s a poverty which is moving up the economic level.
“It’s not just the 17% of children who are now suffering from malnutrition in the UK, it is now middle-class people who will not be able to pay their mortgages when they are reset who are finding it difficult to make ends meet, and it will just it will move across the whole of society.”
The UK’s economic downturn worsened in October, with growth in the private sector slowing to a 21-month low, according to new figures.
Output declined for the third month running following a period of political turbulence that has dragged on the financial markets.
The influential S&P Global/ CIPS flash UK composite purchasing managers index (PMI) showed a reading of 47.2 in October, below September’s 49.1 reading.
It also fell short of the 48.0 market consensus, although analysts at Pantheon Economics had predicted a more accurate PMI of 47.0 reflecting political and economic uncertainty taking its toll on private sector businesses.
Any score below 50 is considered a contraction for the economy, while anything above is seen as growth.
The index showed that there was a steep fall in output in October as manufacturers continued to grapple with supply shortages and a slowdown in demand.
Meanwhile, business activity across the services sector, which includes hospitality like restaurants and pubs, declined for the first time in 20 months and at the fastest pace since January 2021.
The survey asked thousands of businesses about their trading each month and is closely watched around the world.
Squeezed household budgets, recession concerns and delayed business investment decisions due to political uncertainty were all cited as factors leading to lower output this month.
The CIPS said that the decline was “no great surprise” given that businesses are worried about politics, rising interest rates and historically high costs.
As a result, optimism levels amongst manufacturers and within the service sector slumped to a two-and-a-half year low.
‘Certain to fall’
Chris Williamson, chief business economist at S&P Global Market Intelligence, said that aside from during the Covid lockdowns, the index was the lowest since March 2009.
He said: “October’s flash PMI data showed the pace of economic decline gathering momentum after the recent political and financial market upheavals.
“The heightened political and economic uncertainty has caused business activity to fall at a rate not seen since the global financial crisis in 2009 if pandemic lockdown months are excluded.
“Gross domestic product (GDP) therefore looks certain to fall in the fourth quarter after a likely third quarter contraction, meaning the UK is in recession.
“Business confidence has, meanwhile, collapsed, sliding to a level rarely seen before in 25 years of survey history, meaning companies are becoming increasingly nervous about the outlook.”
Staff hiring was hailed as a relatively “bright spot” in October as employment numbers were boosted by firms’ post-pandemic recovery plans.
Nonetheless, the rate of private sector job creation was the slowest for 20 months, the survey revealed.
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