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No time for political point scoring as economies ‘teetering on brink’

No time for political point scoring as economies ‘teetering on brink’

Prime Minister David Cameron flew home from the G20 conference in Brisbane grim-faced.

He returned to Westminster with a warning that the outlook for the global economy isn’t too good right now.

In fact he told the House the “red warning lights are once again flashing on the dashboard” just six years after the worldwide financial crash.

Now, all such pronouncements have to be seen in context.

We are just months out from a general election and the Tories see their stewardship of the UK economy through the difficult post-recession years as their trump card with voters. Put simply, they believe they have the trust of the people on this issue.

So you can see why pushing the fear button at this time may be politically astute.

If voters can be scared into thinking they are better off sticking with the status quo than risking a change of leadership then it won’t be Mr Cameron joining the dole queue come May, it’ll be Mr Miliband.

But while the timing may be convenient for Mr Cameron from a domestic politics point of view, sadly I don’t think his view on the global economy is too off par right now.

There are significant and growing problems within the world’s major markets.

As a timely example, Japan moved back into technical recession this week after two consecutive quarters of negative growth (still a strange turn of phrase if you ask me).

And why does that matter?

Well, Japan is a long-standing member of the G8 club of the world’s largest economies; it is a global player in the vehicle manufacturing sector think Honda, Toyota, Kawasaki, Suzuki et al; and it leads the world alongside the likes of South Korea and China in the electronics space. It is also a leading financial services hub.

It may be an overstatement to wheel out the old line about the whole world catching a cold when one major economy sneezes, but Japan’s situation is a worrying indicator of the strength of the global economy.

And then there are the Bric countries Brazil, Russia, India and China whose performance in the post-recession era helped to pull the global economy up by its bootstraps. But for one reason or another their progress has also stalled in recent months.

China, a nation with a labour force of almost 800 million people (that’s 12 times the size of the entire UK population), has been a true powerhouse over the last 30 years, delivering double-digit economic growth year on year.

But that rate of expansion has now slipped to a forecast of around 7% for 2014, and there are concerns that it may fall further in the months ahead.

However, perhaps as significant for the health of the domestic economy are the continuing woes in Europe by far the UK’s largest trading partner.

Mr Cameron warned that the region was “teetering on the brink” of a third recession.

You need look no further than Germany, the beating heart of the eurozone, for evidence that all is not well. The industrial giant narrowly avoided a recession of its own last week after it managed to eke out 0.1% growth in the third quarter following a 0.1% reverse in the previous period.

There was marginally better news in France, where a 0.3% quarterly rise beat expectations, but it again came on the back of a fall in output in the second quarter.

The UK may be growing right now, and at a stronger pace than many of its large economic rivals, but the recovery is a long way from being secured either at home or abroad.

Mr Cameron was right to highlight his concerns, but I hope he understands this is not a time for political point-scoring.

It is a time for clear thinking and well-executed strategies that provide the stability and platform needed for renewed world growth.