UK continues to drop back
15 Jan 2000
The British economy is slowing down, but is not heading into recession, according to BP Amoco Chemicals' chief economist Malcolm Mitchell. For Europe as a whole, however, economic growth will continue.
Economies continue to be buffeted by the chaos in Asia, which economists seriously underestimated, an apologetic Mitchell told the recent Chemical Industries Association investment outlook conference. Import demand has slumped, competition intensified and exchange rates risen. `Everyone is beginning to feel the pinch,' he commented. However, Europe's ecomony was still generally healthy. `Most certainly the recovery will bend in the wind, but it's sufficiently deep rooted to survive.'
The UK is ahead of the continental cycle and is poised over a trough. Mitchell described prospects as `worrying, to the extent that we've lowered our forecast (for GDPgrowth) to 3+4 per cent. For chemicals, this means that output growth will halve, only reaching 1+2 per cent in 1999.
Despite the overall gloom, Mitchell said that businesses need to keep their nerve. `We need to steer a fine line between realism and excessive pessimism,' he said. `At all costs we must avoid the pitfalls of a self-induced, self-fulfilling downturn. Cool heads, stout hearts and a touch of charismatic leadership is what we need.'
