Joseph Stiglitz, Nobel Prizewinning economist and professor at Columbia University, New York
The joke about London being Reykjavik-on-Thames is not appropriate. What's happened is a milder version of what has happened in the US, only a little more transparent. My sense is that America may be in far worse shape. The UK does not have the housing glut that the US has. The financial services industry does play a more important role in the UK economy, but in both countries its collapse has serious ramifications. I think the UK may be better placed to tackle this, because the US still has a hang-up about nationalisation. The US is in the position the UK was in at the time of Northern Rock. The British Government spent a couple of billion trying not to nationalise it; I think the US may spend about $2trn before coming to the realisation that there is little alternative to a significant government role.
David Smith, Chief executive, Jaguar Land Rover
Today's GDP figures will no doubt confirm what the automotive industry had been experiencing for a while; the UK is firmly in recession and is likely to remain so for some time. Figures from the Society of Motor Manufacturers and Traders yesterday show a sharp decline in sales and production in the final quarter of 2008. The banking crisis choked off access to credit, without which no business can survive. That is why it is critical the Government support large business too. We have not asked for a bailout but access to credit at commercial rates. Jaguar Land Rover made a £600m profit in the 18 months before the credit crisis. We're a viable enterprise with desirable products; we support 15,000 jobs directly and a further 60,000 in the supply chain; we invest £400m a year in research and development; we export 70 per cent of production, worth over £4bn to the UK balance of trade. That is a British success story.
Ruth Lea, Economic Adviser to the Arbuthnot Banking Group
The UK is not finished, but it is distressed. Very distressed. We'll probably see a contraction in the economy of 3 per cent his year, which means another million, at least, unemployed, and another 10 per cent or more off property prices, rising arrears and repossessions. That will happen whatever the Government does. However I think they should plug doggedly away at their policies to improve the availability of credit in the economy. They ought to try very hard to limit the extent of nationalisation, so that the banks actually still compete against each other. The banking package ministers announced last week was not bad, and the asset purchase scheme, where the Bank of England buys securities from banks and companies, could be developed into a useful system for "quantitative easing" or so-called printing money. I can't see the point of cutting interest rates again.
Martin Weale, Director, National Institute for Economic and Social Research
Will the UK go bust? No. It's a silly question. We could end up borrowing from the IMF, but that is plainly not the same thing. The recession will probably end up being comparable to the one in 1980, with output falling for most of this year. But that assumes that credit conditions improve. The Government is effectively saying that it will carry on thinking about ways to make this happen until something works. It may well be that that turns out to be nationalisation of the banks, and the Government will probably do that quickly in preference to letting the situation drag on for another six months. I would probably have gone for a larger fiscal stimulus than the Government did and cut national insurance rather than VAT. The cut in VAT will push demand up at the end of the year, before it expires, whereas we need a boost now.
Vince Cable, Liberal Democrat Treasury spokesman
Britain isn't finished but the crisis is severe, and worse than elsewhere because the financial sector is so big and the borrowing and personal debt bubble was so extreme. Years of big budget deficits will also increase doubts about government debt. When the economy recovers, and it will, we cannot go back to the status quo. The economy must be radically rebalanced. The overriding priority is to avert a long, deep slump. Our government (and others) must maintain low interest rates and counter monetary contraction, use sensible public works projects as a fiscal stimulus, avoid protectionist policies and most importantly, review bank credit. One or more big banks will have to be taken into public ownership to identify and clean out bad debt, ensure new credit flows and reintroduce safe banking practices, hiving off high-risk operations.
John Cridland, Deputy director general, CBI
We are in for a deep and long recession and it has got worse since Christmas, but we will come out of recession eventually. There has got to be a rebalancing of the economy away from over-reliance on financial services. Business leaders see opportunities in the low-carbon economy and energy efficiency. For instance, we are going to spend £130bn-£150bn on renewables and nuclear. There is potential for something of an industrial renaissance. Monday's banking package gives us some hope but it won't affect the economic figures for some time. They still haven't dealt with trade credit and we want the Government to do something similar to the French by topping up that market. We are also looking for them to extend finance guarantees to the finance arms of the automotive companies.
Jon Moulton, Founder of private equity group Alchemy Partners
Everything I see shows a worsening economy. Most of the companies I see are coming up with figures which are frightening. The currency slide is going to mean that inflation will be back with us earlier than expected. It will be interesting to see if the Government can raise money overseas without letting interest rates rise. I expect a tough year – we are not likely to sink completely but a few waves may hit us. We are not finished, just completely battered and will remain battered for a long time. If I was in government and had done what they have done so far, I would do my public duty and do myself in. The Government can try and take the edge off the pain now but if they do that it will be at the expense of debt and inflation. I'd like them to accept it will be bad and take hard decisions. If you nationalise the banks you can lend whatever you want.
Theo Paphitis, Owner of the stationer Ryman and star of Dragons' Den
It is by far the worst recession in living memory. It is not something that we will ever see again in our lifetime – but it will come to an end. This is an unprecedented situation where the Government do not have a clue about what to do and are making it up as they go along. But the big problem is the lack of transparency as far as the banks are concerned and the sooner UK and European banks show what is on their balance sheets the quicker we can get back on to an even keel in terms of the pound and the euro. It is a pretty tough situation to be in and we have a right to be gloomy, but we have to look forward. People have said that [the UK is finished] many times before but the country has proved to be resilient.
George Osborne, Shadow Chancellor
Of course Britain is not finished, but given the growing lack of international confidence in the policies of the Government, we should be very concerned about the direction in which our country is being led. It is clear the Government's forecast that the recession will be over in five months looks very optimistic and it is certainly out of line with independent forecasters. We urgently need to restore confidence in Britain's economic policy. So we need to hear in detail how the Government proposes to insure against the losses of British banks – and an independent assessment of what those losses are. We need a simpler, bolder national loan-guarantee scheme to get credit flowing to business. The Government has to show how they propose to bring national debt under control. And we have to have a clear, long-term plan to a more balanced, stable economy.
John McFall, Labour chairman of the Treasury Select Committee
Britain can recover from this. We must have an active strategy, including the fiscal stimulus, and decisive action in these difficult times, when the ground is constantly changing. The currency slump does not concern me as it has advantages too for our exporters. I think 2009 will be an unpleasant year for ordinary people. Growth figures will have to be revised. I have no doubt we have saved the banking system. Now the Government needs to be bold and look at the nationalisation of the banks. There is no confidence because of the bad assets on their books. We need safe institutions, and the safest are government institutions at this time.Reuse content