: UK economy: A crisis in the making for some time, with India trade deal offering hope #IndiaNEWS #India London: It has been anything but a smooth ride for the Rishi Sunak led UK government, with the

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UK economy: A crisis in the making for some time, with India trade deal offering hope #IndiaNEWS #India
London: It has been anything but a smooth ride for the Rishi Sunak led UK government, with the latest official data released this week reflecting a shrinking economy and a looming two-year-long recession.
The British Indian former finance minister, who took charge at 10 Downing Street last month with the promise to fix the fiscal errors of predecessor Liz Truss disastrous mini-budget, has pledged to get a grip on the soaring inflation as a priority and warned of tough tax and spending decisions ahead.
Economic experts agree on the massive scale of the challenge, even as they hold out the prospect of a free trade agreement (FTA) with India as a potential generator of much-needed economic growth.
“The economic crisis in the UK is caused by some new and some longstanding factors,� explains Dr Anna Valero, Senior Policy Fellow at the London School of Economics (LSE) Centre for Economic Performance.
“High inflation, high interest rates and tightening fiscal policy occurs against the backdrop of particularly poor productivity growth in the UK since the financial crisis which has been a drag on real wages,� she says.
“There are also large and persistent inequalities in the UK. Combined, poor growth and high inequalities have made the UK a ‘Stagnation Nation, in urgent need of a new economic strategy to move the country onto a stronger, fairer and more sustainable growth path,� she adds.
Asked how an India-UK FTA might impact this scenario, the analyst welcomed the fact that Sunak was committed to an agreement.
“Such a deal could generate growth opportunities for the UK, particularly if there is potential to export services – the UKs key area of comparative advantage – to a market that is expected to grow significantly over time,� she notes.
The energy crisis triggered by the Russia-Ukraine conflict is seen as a dominating factor behind Britains current cost-of-living crisis of mounting household bills. A weak post-COVID recovery, hangover effect of the uncertainties of Brexit since the UK left the European Union (EU) in 2016 and years of underinvestment as a result of austerity in the aftermath of the 2008 financial crash stand out as the key ingredients behind todays mess.
“Long before the current crisis the UK economy was suffering from too little investment, economic inequality both between and within its regions, and resulting low growth,� says Dr George Dibb, head of the Centre for Economic Justice at London-based think tank Institute for Public Policy Research (IPPR).
“This was compounded by the recent decade of austerity, which meant cuts that hit ordinary families and degraded the education and health services that are the building block of any flourishing economy.

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