Protectionism: From recession to depression?
Feb 1st, 2009 by Jamie Bradley
Friday 23rd January 2009. The day the British economy finally entered recession following a lengthy period of the credit crunch sinking its teeth into the economy.
Since my last blog earlier this month, the country, which seemed to be at its worst financial point in a number of decades, has continued to go down hill. Unemployment figures are now bordering the two million mark and with more companies offloading staff as goods demand for goods from UK firms fall in conjunction.
38% of companies enforced redundancies in the final quarter of 2008 and it is largely expected that this trend is set to continue for at least the first three months of the New Year, according to the Confederation of British Industry.
And if past predictions are anything to go by, then the CBI’s latest forecast will offer little in terms of encouragement for small and medium sized company employees. In September, the CBI correctly predicted the country would go into recession and the outcome speaks for itself.
Aside from recession, the key word of the week revolves around the policy of protectionism; the provision of imposing duties on imports from foreign countries. The initiative is designed to protect home industries from overseas competition, but both Gordon Brown and Peter Mandelson have both warned against the idea.
Because we are in a global financial crisis, as opposed to a purely national predicament, the prime-minister believes that the world should “come together” to resolve this global economic downfall.
We may argue that in order to recover as a nation, we need to look after our own needs and ensure that British unemployment is dealt with first and foremost before any other nation. There have been examples of workers’ strikes this week following claims that foreign labour has been used, despite the increasing number of British citizens losing their jobs.
However, Lord Mandelson echoes the thoughts of Gordon Brown, claiming that “protectionism would be a sure fire way of turning recession into depression”.
At the same time, the government have a duty to ensure that the British economy gets back on track and recession does not become synonymous with the new decade, with 2010 looming.
If we are to put more money back into the economy, then for that to happen people need to be in work and unemployment figures need to fall so that the economy can grow.
Whether or not protectionism comes to fruition in the UK, I am still sceptical about the possibility of any kind of economic boom over the coming years, but even Robert Peston has been known to be wrong before, so all we can do is wait and see.
By Jamie Bradley
