The Uk In Post Recession Europe

The United Kingdom in Post Recession Europe

‘Comment’ THE UK IN POST RECESSION EUROPE

There are many who assume that once the global recovery from recession shows signs of stability, the UK will again regain its position within both the global and European economies and yet, there are very few that can give substance to this assumption.

Being physically separated from the European continent causes some disadvantage for the UK economy, being that the UK must be able to export its finished products to an beyond Europe and that the majority of the base elements required for manufacturing have to be imported. UK home markets are insufficient to warrant an industrial manufacturing base and with strong competition from China, Japan and other Asian states, the UK manufacturing base is not in a position to provide the low cost production methods to compete. With (in 2009) high unemployment, manufacturing closures, the high cost of labour and a reduced manual labour skill base, the UK is not in a position to recover as well as many other European states, where labour costs are lower, raw materials are more available and local economies (often backed by government) are willing to invest or take partners from the Orient and Asia. In some aspects the united states of Europe (European Union) has shown to the rest of the world two major points. [a], the European Union has become a major trading area within its own borders and with the rest of the world and [b], has created some fear in the Russian border states and Russia as they believe that the European Union takes trade from these areas with which these areas cannot compete. The European Union has also become a strong marketing arena, being able to co-ordinate many of its industrial activities, although this does have a tendency to create conglomerates. With more and more companies amalgamating into conglomerates, consumer choice is being reduced to a situation whereby international conglomerates in the auto industry, insurances, banking and food retailing dominate the combined economies and in some way, rule these economies as they gain greater power. A look at the UK auto industry shows that none of the large car makers are British owned and that the international investors that now own the car manufacturing plants in the UK are reducing their investment and putting greater investment into the European continent. Any recovery in the UK economy after recession will show a much reduced role of car making and other manufacturing plants that rely on car making. With the future probability of some effect from global warming, Europe and the UK face the potential of greater competition for low cost transport and Oriental and Asian nations are investing heavily in electric and other technology in order to be able to dominate the automotive sector and leaving aside the [small] potential of any competition from the rest of the world. The recession has halted investment in the major manufacturing industries of Europe, whereas the Oriental and Asian nations have invested heavily and their investment has concentrated on low cost and low energy use technology. The Economy: The UK economy has for many years depended on service provision, especially within the money and insurance markets, whilst the manufacturing base dwindles; often being sold off to international interests, who may have absorbed much of this base as a means to bury it under programmes to uplift other interests. There are many that will argue that the UK economy should join the 'Euro' and be done with it; whilst a few would argue that the Pound Sterling has a role to play when other currencies drop. There is much to this argument as without a third currency the two dominant currencies of the USA Dollar and the 'Euro' would play off too much against each other and other large economies would have no shelter for their currencies when the two major currencies are in trouble. The UK has often been said to be a bridge between the USA and Europe and this may equally apply to the currencies also. That the present UK government has sold off a large part of its gold, in favour of purchasing the 'Euro' may show some lack of confidence in both the Pound Sterling and gold, although the general lack of confidence in any currency has caused many to invest in gold for its

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reserves and given that gold keeps rising despite the many new finds bears this lack of confidence out. The table shows some of the major European nations’ gold reserves (as in March 2009) and shows that the UK has gold as only 18.7% of its reserves, against between 90% and 42% of other countries. This shows that the UK has missed out on the rising value of gold during 2008/2009, whereas the USA holds 8,133 tonnes. Holding in the USA Dollar has been a mixed blessing for some nations, especially during a recession when the import / export market has been very low. China holds $2132 billion (June 2009), Japan holds $1019 billion (June 2009) and Russia holds $401 billion (July 2009), although Russia has been selling some of its dollars in order to purchase the 'Euro'. Russia presently holds €400 billion and China €700. In competition with other European states the UK will be dependent on its manufacturing base as the recession recedes and the major European competitors will be Germany, Italy and France with Spain and The Netherlands competing strongly in agricultural production. Therefore, the UK governments’ economists have a quandary. For ease of trading and to reduce the fluctuations in Pound Sterling values it may be advantageous for the UK economy to join the 'Euro'. On the other hand the value of the Pound Sterling as an alternative currency to either the USA Dollar and the 'Euro' when investors are looking for a safer currency for short periods. There is also the emotional attitude of the UK citizens towards holding and using their own currency and this is a powerful argument for some. The recent decline of the Pound Sterling against the 'Euro' has induced some Europeans to come to the UK to purchase goods, although this has been insufficient to boost the manufacturing sector. Migration: As can be seen from the map (Europe Migration 2007) internal migration within the European Union has seen a drift of people from east to west from countries with low incomes and service provision to those areas where it is perceived that life is better. On a world scale the European Union has attracted many from Africa, Asia and Southern America and these have added to the economic woes of many of the European Union countries because of being states which provide social services as a given right. Given the global climate change scenario, they is growing concern that many more from developing countries will migrate to Europe and that the social service provision of the European countries will come under greater stress. That food resources will also come under stress is

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without doubt and is of great concern to natural resources planners and the potential for civil unrest that may be caused by food shortages. Food Security: Given the inevitability of shortages of basic foods within Europe and the rest of the world, it should be of concern that neither the European Union nor the UK has put in place plans to deal with the consequences of food shortages, or, if so, they have failed to keep the public aware of both the present or future planning scenarios. Whatever plans are in the pipeline there will be a gap in food production throughout Europe, as southern Europe starts to produce less and before northern Europe can increase its production. There are also indicators that it may be likely that as industrial manufacturing starts to fail in the UK; UK citizens will themselves start to migrate, especially those with saleable skills and yet, there will be limited places to where the skilled workers could migrate to. Australia and New Zealand will suffer problems with climate change and will not want more people. The more northern states of South America may take some, to help in the expansion of their agricultural and mineral resources and also Canada may decide to open more land for agriculture in order to assist with the feeding of the USA and Europe. Asia, with its many over populated states may attract specialists but are unlikely to take large influxes of skilled workers. Mainland Europeans are more used to migrating as opposed to the citizens of the UK who prefer to entertain themselves in different countries, but who prefer to remain within the home comforts that the UK provides. America will of course look after its own and further reduce their immigration allowances as it rebuilds its manufacturing and agricultural bases. In agriculture, both the UK and the European Union have great opportunity to improve their food security potential, although the many years of neglect by governments and conglomerates to invest in agriculture show that agricultural development and thus production cannot keep pace with the needs of growing populations and are still heavily dependent on importing a majority of their foods from developing nations. The dominance of the food retailing industry has ensured that both the UK and European Union cannot compete. Governments everywhere have handed over the responsibility of food availability to the supermarket conglomerates and have failed to note the steep decline in local food security. In the face of major effects from climate change, the European and UK governments’ have ensured that [a] we are not food secure and [b] will not be food secure in the future. With a declining manufacturing base and thus income generation ability, more people in Europe, inclusive of the UK will suffer from food insecurity.

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The map shows the projected area of crop yield changes in 2050 and shows that the major areas of France, Portugal, Spain, Italy and many Baltic states as having greatly reduced yield abilities, showing that the European continent will depend more on importing food, than it does already. To counteract some of the affect of lost production in these areas, there are other areas where crop yields will increase, but these are unlikely to provide sufficient over losses. Russia, with its vast areas of land that is, at present, too cold to grow many crops, will become a major producer with ready consumers in Europe to take up the surpluses. It may therefore become more likely that European food security may be dependent on Russia and its satellite states and this, together with greater dependency on these countries for oil, gas and minerals may also alter some political alliances. Food security is not necessarily about a country being able to provide sufficient [basic] food from its own [home grown] resources; it is more about being able to create the wealth required in being able to export goods and services for income, which, in turn, is used to purchase imported foods. The UK is in a poor position to be able to recover its agricultural production and will rely on supplies from the rest of the world for many decades and there is a moral question raised within this scenario. Unless the rest of the world can produce surpluses of the basic foods, it should be asked if it is moral to deprive at risk countries of their basics, in order to feed the UK. Without doubt, there will be some effect from changes in the global climate and Europe will not escape some of these effects; although various scientific authorities estimate temperature increases in a range between 2.0oC to 6.0oC. Whatever the increase in temperature will be during whichever decade little has been advertised about the changes in rainfall or in the violence in delivery of the rainfall. Those that have lived and worked in tropical areas know about the violence in the delivery of rain; often creating large-scale soil erosion and flooding, not experienced for many decades and these have become more frequent. Not only have there been changes in rain precipitation but also of the reverse, whereby severe droughts are affecting many more areas than before. There have also been some changes in seasons noted and this has turned farming calendars on their heads. A notable example of this is South Africa where annual frosts have moved by months.

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Europe’s soil moisture holding ability

(Part of a map presented by the USA Department of Agriculture to represent the water holding capability of soils)

As the map above shows, much of the envisaged food security for Europe depends on water resources and the ability of the soil to be able to retain the water and as can be seen, most of northern Europe cannot retain sufficient for long-term agricultural production purposes. This makes sustainable water harvesting very important within a food security programme and it also gives rise to a suggestion that European nations could harvest and desalinate seawater for future irrigation programmes. A change in climate over Europe can also bring some benefits, as the warmer ambient temperatures will allow crops to be grown over longer periods throughout a year and more exotic crops could be grown. The UK may even become a major wine and fruit producer. Undoubtedly the European Union will come to depend more on the eastern European countries for major crop production in wheat and barley and may also include maize. With the vast areas of land not suitable for arable production, the future for the livestock industry may also be more sustainable than it is now, reliant on supplementary feeding using cereal crops and pulses better used for direct feeding to humans. Although the UK has a long established agriculture sector, the UK itself is importing more basic food than it should and lack of investment in the UK agricultural sector may have a long term detrimental effect. The loss of government support for agricultural research and also the lack of support for university places in the wider agricultural sector, places the UK many years behind other European nations, which see agriculture as a future growth industry. Research has been left to the private sector and this has created some antagonism against the private sector, with varieties patented and royalties imposed. Opinion:

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Overall, many are beginning to think that the UK will become a third rate manufacturing area and more likely to become an assembly area for European and other international conglomerates. The lack of skilled workers and the lack of investment in agriculture will again have a detrimental effect on the UK economy from which, the UK might not be able to recover, or may take many more years than the rest of the European Union to recover and thus, become more dependent on importing basic foods. That the various UK governments have and will continue to leave the food security issue in the hands of supermarket conglomerates and will also continue to ignore the full potential of the UK agriculture sector. The UK will again become dependent on income on its service industries for wealth creation such as banking and insurance, although some of the UK companies now are owned outside of the UK. The cost of energy to power public and private outlets will rise without low cost equivalent power generation resources being put in place to fill the ever growing gap in provision, with many of the energy producing assets owned by European companies. We may see, in the not too distant future, some of our skilled blue and white collar workers immigrating to countries that can still offer a more stable professional future, leaving the UK bereft within the skill base. It is hoped that debate will abound and that the UK governments of whatever belief will not only be seen to paper over the apparent cracks, but also address the needs of a population that should know more than it does. It is also hoped that academia will participate in more applied sciences and reduce their involvement in ‘think tanks’ where debate becomes inconclusive. However, it is accepted that the UK society does not seem to want to know more and are content to keep their heads in the sand; global warming may drown a few of these.

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