The Economic Relationship between the US and the UK
The Chancellor of the Exchequer, Rt Hon. George Osborne, spoke at an Atlantic Partnership event on Wednesday 10th July on the subject of the economic relationship between the US and the UK – a relationship in which the US is the largest foreign investor in the UK, and the UK the largest investor in the US.
Here are some of the issues he addressed:
Transatlantic Trade Investment Partnership
The Chancellor discussed the importance of the Transatlantic Trade Investment Partnership (TTIP) Despite reservations within the EU and amongst protectionist in Congress, there is political will for the implementation of TTIP as evidenced by the recent talks between President Obama and Prime Minister Cameron on the subject at the G8 in Northern Ireland. However, Mr. Osborne warned that the implementation of TTIP was not inevitable. There was still much to be acheived surrounding the inclusion of Financial Services in TTIP and the regulation of compensation.
US & UK Fiscal and Monetary Policies
Mr. Osborne discussed the economic similarities between the US and the UK. Both countries enjoy comparable levels of public debt, unemployment and size of deficit. Fiscal consolidation in the US over this period has been 1.8% of GDP in comparison to 1.1% of GDP in the UK.
The Chancellor stated that both the UK & US have adopted a tight fiscal policy whilst adopting loose and creative monetary polices.
He said that the US had dealt more decisively with the banking problem than the UK back in 2008/9. Immediately following the crash, the US aggressively recapitalized their banks.
In the UK, the workforce participation rate has increased. There has been an acceptance and willingness by the British workforce to accept pay freezes in return for continuous employment. This had resulted in less unemployment rates than in previous recessions.