2010: The death of the Tiger?

Cardiff Business News

AS Ireland laments the death of its Celtic Tiger the Chinese are preparing to see out the year of tiger to ring in the new year of the rabbit. It seems 2010 has brought the death of the tiger, making it an endangered species in the West.

Tiger
The death of the Celtic Tiger in 2010

This year finance ministers in the Eurozone have struggled to keep inflation low, ensure banks are furnished with credit and balance the demands of taxpayers against investors. With all the talk of cuts and austerity, what has got us in this mess, and what does 2011 hold for Western Economies?

European Bailouts
The Eurozone has had a rocky time. In May the IMF and the European Union announced a support package for Greece to the tune of 120bn euro. In November the same pair had to come to the rescue in Ireland with an 85bn euro package, despite the country’s initial denial that it needed any help. Fears of contagion in the Eurozone have not yet been quashed as some investors anticipate bailout deals for the Iberian peninsula.

European Day Of Action: Protests In Dublin - September 29th.
The Irish banks will get around 11bn euro from the European Financial Stability Mechanism (EFSM)

Austerity
For much of the developed western world it has been a year of austerity with spending cuts, tax hikes, bank bailouts, quantitative easing and emergency summits. The UK’s coalition government announced its comprehensive spending review in October, passing the buck (certainly not literally) to regional governments. Next year VAT, a consumption tax, will rise to 20% while spending cuts in the public sector will mean around 330,000 public sector workers will lose their jobs.

Go East
“Go East young man” has been the motto of the middle class with increasing numbers of investors and students looking for better job prospects and growth in Asia. Meanwhile the Euro crisis has prompted a move by the Chinese government to pour capital into the west by buying European bonds to ensure European financial stability.

The Welsh View
As for Wales – The Ryder Cup may have brought much international attention in 2010, but in terms of the economy, Wales has received very little good news of late. The office for national statistics released data last month revealing Wales as the poorest nation in the UK. And with an workforce heavily reliant on the public sector, a drive in the private sector may be hampered by poor technological infrastructure.

Reasons to be cheerful
While there has been much doom and gloom in the past year there are still some reasons to be positive for 2011. Wales is set to cash in on London 2012 as it will host 14 football matches and be used as a training base before the games by some international teams. It has never been easier to start a business, with a boom in online start-ups and the Cardiff Bay development has brought life to the Welsh capital. One indicator we will all be watching with anticipation is GDP, as the CBI has predicted 2% growth for the UK economy in 2011.

In Europe it is yet to be seen whether the ECB issues e-bonds or will increase the EFSM to stabilise markets.

Let’s just hope there is not a double dip recession, turning the year of the tiger to the year of the Bear.

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The BBC dosen’t tell the full story about China

Cardiff Business News

The Cardiff Business community heard how BBC coverage of UK trade with China does not show the full picture at a business event in Cardiff earlier tonight.

Over one hundred people attending the event organised by the Cardiff Confucius Institute heard from business leaders who are currently operating in with the world’s fastest growing economy.

Representatives from leading Welsh Businesses presented case studies and success stories of working China, dispelling claims in the UK media that a trade imbalance was desperately in favour of the world’s fastest growing economy, which saw its GDP increase by 8.7% last year.

Stewart Ferguson of CBBC, the China Britain Business Council, challenged reports from BBC’s business editor Robert Peston who said Chinese exports to the UK were three times the figure for imports.

In an article on the BBC website earlier this month Mr Peston said: “In 2009 we sold £8.7bn of tangibles and intangibles to China, and we bought three times as much, £25.8bn, from the Chinese,” he says.

“Although over 10 years our sales of goods and services to China have increased by a seemingly healthy 4.6 times, imports have risen by a far greater multiple, 6.6 times.”

Mr Ferguson said although this was true, there were other contributions to the UK economy from China such as £2bn per year coming from Chinese students in China.

He added there are 4,000 British enterprises in China, while UK based accountancy firms dominate the Chinese market and as over 150m Chinese residents are expected to flock to the cities over the next ten years demand could grow for UK goods and services.