Filenews 4 September 2024 - by Angelos Angelodimou
Britain's economic and trading partners sounded the alarm bell after Britain's new prime minister, Keir Starmer, spoke of a very difficult period in which "things will get worse before they get better". Britain may have ceased to be part of the EU, but a recession would affect several countries that trade with it.
Cyprus is a country directly concerned with the course of the British economy. Apart from the fact that a large part of our tourists are British, our country imports a large number of products from Britain, while at the same time a respectable percentage of our exports are destined for that country.
It is recalled that in July 2024,Britons accounted for 33.9% of all tourists to Cyprus. On the trade side, Great Britain is one of our main trading partners. According to 2023 data, Britain is the second country in terms of imports into Cyprus after Greece, with a product value of €1.3 billion. (21.90%), while in this country we export products worth €219.8 million. (4,69%).
Speaking to F, economist Yiannis Telonis said Britain's economy was facing major challenges and it would take a few years to recover from its situation. Whether it will eventually enter recession or move to growth rates of about 1% remains a question mark, but it is certain that serious measures and systematic effort will be needed for a few years to return to substantial growth. He noted, however, that we are talking about an economy with a budget exceeding 1 trillion, so it would be risky to say that serious problems will arise for Cyprus because of the British economy.
Commenting on the challenges facing the British economy, Yiannis Telonis stressed that productivity growth is a key point. Also, an important element is the reduction of the country's debt. These two elements are essential for the country to return to normality. Beyond that, two main challenges that the British government must overcome are: (a) Solving the housing problem. According to estimates, 1.5 million houses are currently needed to meet the needs that exist, which is why there is expected to be a redesign of the urban planning regulations. (b) The sustainability of the national health system. As is well known, the country's health system is facing serious challenges and significant changes need to be made to make it sustainable. Some other points that the new government should pay attention to are the transition to the green economy, attracting investment and further developing and exploiting technology.
It is noted that British GDP grew by 0.6% in the second quarter (April-June) of 2024, following an increase of 0.7% in the first quarter (January-March) 2024. Compared with a year earlier, British GDP is estimated to have grown 0.9% in the second quarter, according to the latest estimates from the Office for National Statistics. In 2023, the British economy recorded two quarters of negative GDP growth – the most common definition of recession – with GDP showing zero growth in the second quarter and contracting by 0.1% and 0.3% in the third and fourth quarters of the year.
What Starmer said about the 'black hole'
The country's new Prime Minister Keir Starmer, addressing the public, said a £22 billion "black hole" had been discovered in the public finances, which the previous government had hidden from the independent Office for Budget Responsibility. Starmer said it would take time to rebuild Britain and rid itself of the rot he said had prevailed under the previous Conservative government, and warned that "things will get worse before they get better". This fact could not go unnoticed by European countries, as Great Britain may not be a member of the EU but a possible recession is expected to affect neighbouring economies.
