Britain Insisted the Financial Tighten Policy - By: Allan Michael Taylor

UK economic data released in August revealed a mixed complex economic situation. According to the latest data of National Bureau of Statistics, second quarter of UK retail sales, public debt, the employment situation Dengjun better than expected GDP growth revised to 1.2%, higher than the previous estimate of 1.1% slightly. Compared with the UK services sector grew 0.7% in the first quarter, the construction industry increased by 8.5%, both to promote the UK as an important factor in economic recovery. Analysts believe that, despite the growth in the second quarter of the British economy was better than expected, but in the second half will continue to face many risks.

The current economic situation, the British Government still cautiously optimistic, insisted that tightening fiscal spending and low interest rates to maintain balance policy is the best way to deal with economic risks. British Government also hopes to attract foreign investment and expand through increased trade and other measures, to seize emerging market opportunities, to maintain stable economic growth to achieve the goal. Finance Minister Osborne has said that the current cost-cutting and maintaining low interest rate policy is the best way to sustain economic growth, can help eliminate the biggest current downside risks to the UK economy. Bank of England officials Posen argued that third-quarter export data, European trends and the evolution of debt crisis, inflation and other factors that affect the central bank's monetary policy will become an important factor, the central bank announced in October will make a summary of economic data, accurate to judge the economic situation then determine its monetary policy direction. If the situation worsens, the central bank will not rule out taking further measures to ease monetary policy.

Economists believe that the second half of this year, the UK economy will face multiple challenges. First, a substantial reduction in expenditure on the economy will gradually become apparent inhibition. According to the British Government announced in June the budget plan will be implemented in the UK 2015 113 billion pounds of cost-cutting plan and tax increase measures. This caused great pressure on private consumption will gradually appear, the public sector's contribution to economic growth will also decline. Latest data show that in August the UK manufacturing purchasing managers index fell to 56.9 from July's 54.3, below market expectations that the UK manufacturing sector growth has slowed down significantly.

Second, an important benchmark as one of the price of economic decline. UK latest survey of housing sites, as the British Government's austerity policies severely inhibit consumer housing demand, as mid-August, the British chain price index fell 1.7%, the highest since December last year, the biggest monthly decline since, so indicate increased risk of British economic stagnation.

Third, inflation worries intensified. Office for National Statistics data showed Britain's inflation rate in July to 3.2% in June fell to 3.1%, higher than the central bank's 2% target inflation rate 1.1 percentage points higher. Despite the Government's austerity, sterling depreciation and oil prices, the inflation rate is expected to be controlled during the year, but starting in January next year's action will raise value-added tax could once again push the inflation rate. Bank of England governor Mervyn King has said raise the level of value-added tax may result in inflation in 2011, most of the time above the target. Analysts pointed out that this is another example of the British economy may fall into stagflation dilemma.

Fourth, the global economy faces the risk of second bottom a negative impact on the UK economy. British economists expect the U.S. economy and the euro zone economic growth will significantly slow down the second half. In addition, the aftermath of the debt crisis in Europe is not flat, the market for European banks to repair their balance ability to show concern, and in recent months of financial market turbulence.

To address these challenges, the British Government efforts to attract foreign investment, seize the opportunities brought by new market to expand exports as increasing employment and promoting an important basis for sustained economic recovery. Cameron said the Prime Minister vigorously to attract foreign direct investment, the British economic recovery plan one of the core. He promised that the British Government will provide foreign investors with good investment environment, including lower corporate taxes, providing professional labor and reduce operating restrictions. Commerce Minister Cable also said that foreign investment can create jobs, economic growth is the key to the UK. UK Trade & Investment Department report showed that in March of this year, to the UK's national and regional investment reached 54, breaking the previous record. UK Trade & Investment Department has recently implemented a "to do business in Asia" project, which aims to encourage British companies to quickly enter the Asian market, in the fast growing Asian region to build export advantages, economic restructuring and economic recovery in the United Kingdom to provide assistance.

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