Bearish Vosa sees sunlit uplands for UK economy

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THE chief economist of Yorkshire Bank is feeling more optimistic about the prospects for the regional and national economy than at any time since the global financial crisis.

Speaking to an audience at Leeds Metropolitan University, Tom Vosa said the world economy continues to heal but warned that political decisions have the potential to derail the recovery.

Mr Vosa, who is head of European market economics at National Australia Bank, said financial and business services are driving the UK recovery.

He said: “We were told the banking system would never be allowed to get as big again. It’s now bigger than it was in 2008, along with business services as well.

“It may not been a bad thing. The UK clearly has a massive competitive advantage in services, whether it is education, finance or media.

“It does suggest that Government attempts to rebalance the economy from a command and control system from above are destined to failure.

“What’s worked are the traditional strengths of the UK economy and we shouldn’t forget that.”

Mr Vosa said compensation for mis-sold payment protection insurance has been brilliant for the Government.

He compared PPI payouts to “a massive windfall tax” on the banking sector and raised the prospect of similar raids on the energy and insurance sectors.

He said business investment has been the missing link in the UK economy, although there are signs that corporates are more willing to spend and banks are more willing to provide them with credit.

Mr Vosa said the Yorkshire economy has lagged the UK according to some measures, but others suggest that the private sector is doing very well.

Employment growth stalled in Yorkshire last year, apart from in the real estate sector, which has added 25,000 new jobs in the year to September 2013.

Looking ahead, he said investment intentions are strong in Yorkshire. “That’s really crucial,” he said. “That should drive employment growth. We need to see it broadening out.”

This year, he expects the UK economy to grow by 2.5 per cent, his most optimistic forecast since 2007.

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