Winners
and losers: Who have been the main winners and losers in the crisis and will
this continue?
The following economists’ answers appear in
no particular order.
Dr
Tim Leunig, London School of Economics
Recessions tend to accelerate trends that
already exist. Corus has closed its plant, and that is the sort of thing that
happens in a recession. We will see further job losses in manufacturing, and a
continued shift towards services. That will harm areas that are manufacturing
intensive.
Patrick
Minford, Cardiff BusinessSchool
“Winning” can be seen in terms of fiscal
hangover: those with the least include Australia but there are not many. The
biggest losers are the US and the UK in these terms, plus obviously small
countries such as Iceland, Ireland, and east European economies.
George
Magnus, UBS
The main winners have been Australia, and
Asian and Latin economies with clean balance sheets. Some financial entities
have made out like bandits thanks to government and central bank programmes.
The main losers have been small- and medium-size companies, other financial
companies, homeowners, and the middle class. The government was a winner in the
immediate aftermath of the crisis, but has since squandered its kudos. Next
year’s winners and losers will doubtless change, but it would help to have
greater transparency on government financial policies, and strategies to
restructure the economy.
Paul
Mortimer-Lee, BNP Paribas
There have been few winners. The big losers
are the banks and their shareholders and the taxpayers and their governments.
Those lucky enough to lock into a mortgage tracking a few basis points above
the base rate have been the big winners, at the expense of savers who have seen
interest rate income plunge.
Peter
Dixon, Commerzbank
Winner: The Asian economies, which have
escaped the worst of the banking sector problems. The events of 2008-09 may yet
be seen as a pivotal moment when the Asian catch-up with the US and Europe
received a major boost. This is an inexorable process which will continue.
Loser: The Anglo-Saxon model, in which
markets are paramount, has lost a lot of adherents – particularly within
Europe, where the continental business model has made significant gains at the
expense at this model’s expense. This may be one of those political shifts
which last for some time but such cyclical swings are by no means permanent.
Loser: Banks will be subject to much
greater regulation in future and will clearly not be able to generate the
super-normal profits of recent years. Banks will be subject to this straitjacket
for many years to come.
Loser: The economics profession does not
come out of the crisis well. In the popular view, economists failed to foresee
the crash and are thus seen to have failed. Moreover, many of the intellectual
underpinnings of the discipline have demonstrated shortcomings (eg rational
expectations and neo-Keynesian analysis, which allows a limited role for money
and credit). The good news is that just as the experience of the 1930s sparked
an intellectual revolution in economics, so we have the opportunity to examine
many ideas afresh
Chris
Saunders, adviser to Vince Cable
Ultimately the major loser is the taxpayer
who is going to face increased rates of taxation and lower public spending for
the foreseeable future as the public finances are repaired.
John
Muellbauer, Oxford University
n the main, the bankers are the winners;
taxpayers are the losers. Less skilled and public sector employees will
continue to be losers for the next 5 years. The scale of international banking
reform has yet to be seen, but it seems likely that bankers and asset managers
will continue to do well.
Giles
Wilkes, Centreforum
There have been a surprisingly high number
of winners in this crisis. In terms of households, anyone with a secure nominal
income has had a much better year than 2008. Owners of wealth have been the
major beneficiaries of QE as an insurance policy: predictions of a further 30%
house price fall, which were conventional wisdom a year ago, have been utterly
confounded, and this reversal has effectively added 700 billion pounds to the
future wealth of the already well off. They may not feel it, but the government
has bailed them out as much as anyone.
In more loose terms, I think some elements
of the financial sector have come out well – the accountants, the hedge funds
(whose model has been strongly validated in comparison with banks). If banking
and bankers remains under pressure in 2010, I expect non-traditional forms of
finance to continue to grow. This will be a good thing – as David Miles
observes, we need smaller banking.
The major loser going forward, for good or
ill, is the public sector, which has been relying on unstable “mono-crop”
revenues, to quote Martin Wolf’s recent column. Crisis is an opportunity, and
we can hope that longed-for productivity improvements finally arrive, once the
option of extra cash is definitively ruled out. But it will be bloody, and as
in Greece and Ireland there ought to be real kick-back from the unions. This
may well panic the bond markets for a day or two...
...but (sticking my neck out) I do not see
a debt crisis, yet, being a major feature of 2010. The long duration of most of
the UK’s debts mean that a funding crisis a la 1976 is not really possible.
Debt interest is manageable, and there are recourses for the Treasury like
higher VAT that can satisfy the bond market in a pinch. Plus further QE to help
us out?
David
B Smith, University of Derby
The main winners have been tax and spend
politicians who have used the crisis as justification for a totally feckless
spending spree to buy votes and the financial regulators whose incompetence was
a major source of the crisis, but who have emerged with enlarged bureaucratic
empires and enhanced regulatory powers. The other main winners have been the
securities houses that have survived, which are now making monopoly profits.
These should be broken up on anti-monopoly grounds, especially the large US
houses.
The main losers will be ordinary citizens,
who will end up much poorer as a result of the slow growth generated by high
taxes and excessive regulation, and the future generations who will pick up the
bill for the fiscal “Ponzi” schemes now being operated in Britain and the US.
Savers have also been treated roughly. Pity the poor person who has to take out
an annuity at the present artificially low bond yields generated by QE, for
example! Germany has operated more sensible fiscal policies than the
“Anglo-Saxons” and will end up more highly regarded as a result. The English
economic sickness is now back with a vengeance.
Keith
Wade, Schroders
Emerging markets, particularly China, have
been the winners. Mainly because their banking systems have been less affected
by the credit crunch. More generally, this will continue as long as the US
relies on China’s savings to fund itself. The losers are the UK and the US
given the dependence on financial services and government spending. However,
the US corporate sector is rapidly restructuring and will not be a long term
loser from the crisis.
John
Philpott, CIPD
My main interest is in the labour market.
The main losers have been young people (because recession has impacted on
recruitment to a greater extent than usual because wage and hours flexibility
has reduced the number of redundancies compared with previous recessions), men
(because manufacturing has borne the brunt of the global slump in demand), blue
collar workers (ditto manufacturing and because they find it more difficult to
switch into the part-time service sector jobs at present most abundant), lower
to median paid private sector workers, and businesses, who have experienced pay
cuts and loss of profits. Taxpayers in general have also lost out because of
the need to finance the bank bailouts and the fiscal stimulus. And savers who
are getting little return on deposits. Winners have been better paid private
sector workers who have kept their jobs, benefited from low inflation and low
interest rates. These include financial sector workers who are benefiting from
an artificial stimulus to their bonus pools due to taxpayer support (though
some of this will now be taxed). Public sector workers have also done
relatively well albeit their own recession is on the way, especially from 2011
onward. Shareholders have also done well in 2009 making up for some of the
losses earlier in the recession.
Martin
Weale, Director, NIESR
The main losers have probably been current
and future taxpayers while the winners have been those whose livelihoods and
incomes have been directly protected by the way in which banking bail-outs have
been managed. I cannot see this changing significantly.
Carrick
James, Legal & General Investment Management
The crisis spread from US and UK consumers
to small businesses and exporters who could no longer get trade finance. Given
interest rates are at record lows in many emerging economies, we think their
consumers will remain the winners but US and UK taxpayers/public sector
beneficiaries will be the new losers given the private debt problem has been
largely passed onto the government.
Oliver
Marc Hartwich, The Centre for Independent Studies
The big winners of this crisis are those
countries that managed to avoid the downturn and instead kept growing, most
notably China, India and Australia. The big losers of the crisis are Britain
and Europe: struggling under enormous debt burdens, with overblown welfare
states and increasingly inward looking leaders, their economies were the most
severely affected by the global financial crisis.
Samuel
Brittan, Financial Times
Winners will be those with secure jobs or
pensions. Losers: those losing jobs or fearing that they will.
Dhaval
Joshi, RAB Capital
Politically, Barack Obama was a clear
winner, as the crisis undoubtedly got him elected. But economically, there were
very few outright winners – when asset prices crash and the economy slumps,
very few people end up richer! A big loser was the faith in unfettered, laissez-faire,
free-market economics championed by the US and UK. Hence, an economic and
financial system with more intervention and regulation now seems to be on the
ascendancy, and this has shifted both the economic and political balance of
power away from the US and UK, and towards Europe and China.
Pierre
Cailleteau, Moody’s
There are no absolute winners in such a
global crisis, with a destruction of wealth, a contraction in outputs and
reduced potential growth: this is a negative sum game. There are “relative”
winners, mostly in Asia, as reflected in the changes in global governance. The
main losers are the taxpayers everywhere.
John
Hawksworth, PricewaterhouseCoopers
China has been a key winner and I would
expect this to continue, albeit possibly with some bumps along the road as they
deal with potential asset market overheating. The US, UK and other relatively
highly indebted countries seem likely to see the greatest longer term drag on
growth from the crises.
Richard
Jeffrey, Cazenove Capital
There few outright winners, although Brazil
and China have survived relatively unscathed, to date. Relative winners in
Europe must include France. Within the domestic economy borrowers have,
ironically, been winners. In other words, policy has been aimed at protecting
the imprudent (including government) from the consequences of their actions.
The prudent will continue to pay the cost.
Ruth
Lea, Economic Adviser, Arbuthnot Banking Group
Winners: (i) rescued banks and investment
bankers (there is some overlap here) – will probably continue. (ii) The public
sector still expands and its employees still benefit from better employment
packages than their private sector counterparts – will probably not continue.
Losers: just about everyone else,
especially savers and the unemployed – will probably continue.
Howard
Archer, IHS Global Insight
The winners from this crisis are the
countries that did not take on too much debt. This includes most of Asia and
some of the key countries in Latin America, especially Brazil.
The losers have included those economies
that were suffering from major imbalances going into the crisis, such as
Ireland, Spain and Greece. And, really, the UK. Some countries that were
heavily reliant on global trade suffered particularly hard during the downturn,
notably Germany – but they should be among the most to benefit from the pick up
in global growth and trade.
Andrew
Goodwin, Oxford Economics
It’s difficult to identify too many winners
and very easy to come up with a long list of losers. The UK taxpayer will
eventually be shown to be one of the biggest losers – the fiscal mismanagement
of the past decade will take many years of austerity to fix.
Colin
Ellis, Daiwa Securities
The crisis looks like it will accelerate
the closing of the gap between developed and developing economies, and the
winners/losers label could be applied there. Ultimately, taxpayers have to pay
down government debt and public sector workers will feel the squeeze, and are
arguably big losers too. But for me, the mark of good policy over the longer
term is how quickly policymakers can get unemployment falling, and how low they
can get it (given inflation and budget deficit under control, etc). The risk is
that the people who pay the ultimate price are those who lose their jobs and
fail to find a new one - and these people typically tend to be less well
educated and poorer. Indeed, it was striking that in the Bank of England’s
latest NMG survey that the richest respondents had seen the smallest falls in
their “discretionary” income over the past year. From a social policy
perspective, this is clearly worrying, and from an economic one too, as it
represents lower national income and output.
Picking winners is really tricky. Indeed,
that could be one reflection of the breath of the crisis – the effects are so
widespread across the economy that it’s hard to find people who genuinely
benefit. No doubt that, in years to come, we will look back and see successful
start-ups during the recession. But it’s hard to predict those now.
Stewart
Robertson, Aviva Investors
Tricky. Aside from the developed/emerging
split, everyone has suffered really. Winners are only relative ones!
Ian
McCafferty, CBI
In any crisis of this magnitude, which
triggered the deepest global recession in a generation, there are few clear
winners in the short term. Looking further out, the legacy of the banking
crisis has probably accelerated the eastward shift in economic power, so emerging
Asia, and China in particular, will make relative gains.
Philip
Booth, Institute of Economic Affairs
The main winners from the crisis are
holders of debt capital in bust financial institutions and the main losers are
taxpayers.
Tony
Dolphin, Institute for Public Policy Research
The main losers have been those people who
have lost their jobs, or been forced to take a cut in pay or conditions to
retain them, or have just joined the labour market and find it impossible to
get a decent job. In some cases – wealthy bankers – we probably do not need to
spare much sympathy, as they should be cushioned by their past earnings. In
others – particularly in low value-added manufacturing – the recession has
served to accelerate a process that has been underway for many years, ie the
transfer of jobs from the UK to cheaper overseas producers, but this does not
make life any easier if you live in an area where a major employer has closed
leaving unemployment at very high levels. But in some cases businesses have
only failed because of the depth of the recession and the squeeze on credit and
it is these businesses and their employees who are perhaps the biggest losers
in the crisis, at least within the UK.
Are there any winners? Only those who have
been able to make use of cheap money to turn a quick profit – hedge funds for
example.
Phil
Thornton, Clarity Economics
The losers in the UK may mainly been drawn
from the home owning and consuming sector – ordinary folk in other words – and
those businesses that depend on them. Households have been hit by unemployment
and falling house prices and stock markets (although falls in mortgage rates
have helped). Consumer-facing businesses were hit, as were those dependent on
credit lines. Regions outside London and the south-east were hit worst. Winners
(relatively speaking) included the financial sector thanks to government
bailouts. 2010 may see more of the same.
Geoffrey
Dicks, Novus Capital Markets
Apart from the investment bankers (who
still do not get the scoop), the main losers are the young unemployed. In 1997,
under Gordon Brown’s New Deal, there was to be no unemployment option for young
people – they were either in a job, education or training, or doing some form
of community service. Twelve years later, near-1m young unemployed is a
disgraceful policy failure.
Douglas
McWilliams, Chief Executive, CEBR
Proportionately, the shift from west to
east has been accelerated by the differential impact of the crisis on the
different economies. There have been some particular sectors who have done
especially well – eg Chinese car dealers and real estate developers. The latter
are likely to be squeezed in the coming years when they try to rent out the
properties that they have been building. People working for most governments so
far (especially in the UK) have had a very easy ride, with no redundancies and
considerably faster pay growth than the private sector though this will change
in the coming years. Some of the professionals who handle administration proceedings
are likely to have done well and will probably continue to do so. In the UK one
of the effects of the crisis is to move us from being a strong currency economy
to being a weak currency economy and over time this is likely to mean that the
traded goods sector, which has been relatively depressed, will do rather better
than the parts of the economy that are domestically orientated.
Jonathan
Haskel, Imperial College Business School
Winners, banks and above all bankers.
Losers, taxpayers. As long as gain is private and losses are social this will
continue.
Michael
Dicks, Barclays Wealth
The main losers are the so-called advanced
economies, especially those which let the biggest asset bubbles build – eg
Spain and Ireland. The main winners are those which didn’t – typically emerging
markets. What really matters, going ahead, is whether or not policymakers learn
from their mistakes. Narrow inflation targeting didn’t work very well. Now it
might be better to place rather more weight on asset prices when determining
policy – not just when rate-setting but when setting fiscal and structural
parameters and regulatory policies.
George
Buckley, Deutsche Bank
Winners: opposition parties (especially the
Conservatives and Lib Dems)
Losers: taxpayers; bond investors (as
yields rise)
Ray
Barrell, NIESR
The losers have been the debt prone Britons
and to a lesser extent the US. All trading economies have paid a price, but
China, India and Brazil have weathered the crisis well.
Andrew Hilton, Centre for the Study of
Financial Innovation
I keep thinking that the only “winner” from
the crisis is Canada. Oh, and the biggest banks, who have now essentially been
socialized, even if not nationalized. Everyone else is a loser.
Martin
Gahbauer, Nationwide Building Society
Those with variable rate mortgages have
been the big winners of this crisis, assuming they have remained in employment.
Debt service costs have never been lower than they are now. The main losers
have been those coming out of school and university, as youth unemployment has
risen to record highs.
Nick
Bosanquet, Reform
Losers: Entrants to the labour market
especially the youth unemployed. Male manual workers especially in the UK
regions. For example in the West Midlands the male working age employment rate
fell by 4.1 per cent to 72.1 per cent in the year to September 2009 while the
female rate increased 0.7 per cent. It is likely that more than half the
working age male manual workforce in the UK has been affected either by
unemployment or by pay reductions.
Winners: Staff in the public sector,
particularly in the NHS, where there has been increased pay partly through
generous incremental scales under the Agenda for Change agreement as well as an
increase in employment. People above retirement age with final salary pensions.
Brian
Hilliard, Société Générale
Large companies have won compared to small
companies because the former has had good access to credit over the past year.
Policymakers have been ineffectual in regenerating lending growth to small
companies.
Stephen
King, HSBC
So far, debtors have done rather well as
have those – very few – investors who were lucky enough to have bought risky
assets earlier in the year. Savers, particularly those who rely on income from
their bank accounts, have been hit. Whether this is fair is another issue
altogether.
Peter
Spencer, Ernst & Young Item Club
It’s hard to think of winners, although
Vince Cable has certainly had a good crisis. The big surprise is that
manufacturing was hit so badly. In principle the crunch and the associated fall
in the exchange rate should have hit financial industry and consumer spending
and let manufacturing off lightly, but Lehman impacted international trade
credit and our exports badly. The expectation is that this will turn around as
world trade recovers, but this could just be a pious hope.
Amit
Kara, UBS
Winners
The private sector, most notably small and
medium sized companies, have suffered most during this recession. That is
likely to change in our view. To start with the fiscal consolidation will ensure
that the MPC holds the policy rate low for long and at the same time cost
savings from cuts in public sector pay and employment will exert downward
pressure on overall wage growth. Private sector companies that survive will not
only benefit from increased market share but also from low borrowing costs and
subdued wage growth.
Also, UK export oriented companies will
benefit from the weaker currency and as it happens UK exporters tend to take
that benefit on margins rather than on volume growth.
Losers
Sectors that depend on public sector
investment spending will lose out.
Mixed
Among households, those with mortgages will
win from lower than otherwise borrowing costs but there is every chance the
government raises the VAT rate towards 20 per cent.
Regionally, areas that depend more on the
private sector such as the south-east of England will do well while others,
such as Scotland and Wales, where public sector employment is high, will
underperform. Regions that are exposed to the manufacturing sector will
however, benefit.
Andrew
Scott, London Business School
2009 saw everyone suffer and everyone
respond in broadly the same way. 2010 will start to see differences across
countries and certainly in policies as some nations follow exit strategies much
earlier. Losers are simple – anyone with high leverage, who borrowed short term
and invested long and was exposed to real estate or the financial sector. If
the world economy is improving then the winners will become clearer. Anyone
with assets or access to credit should find a number of attractive acquisitions
possible in 2010. China will probably be looking at a number of significant
equity investments to help its corporate sector in the next stage of Chinese
economic growth
John
Van Reenen, Centre for Economic Performance, LSE
The main losers in a recession, as ever,
are the most vulnerable groups. Young people especially the less skilled have
seen huge falls in their employment rates as these are the first people that
employers let go/do not hire. The cuts in public expenditure are likely to also
hit vulnerable groups as benefits are squeezed. The unemployment problem will
improve as the economy grows but we need to maintain strong activation
programs. If the unemployed lose contact with the labour market as happened in
the early 1980s and early 1990s recessions in Britain and other large European
countries high unemployment rates can persist for a very, very long time.
The financial sector as a whole has lost
its shine and there is likely to be a global shrinking of the sector in
economic importance. More talented young people will hopefully go into
engineering real things instead of toxic instruments. This is a good thing for
the world, but less good for Britain which has managed to get a
disproportionate share of these rent-generating activities.
Economics as a whole has taken an
intellectual hit. I think the general case is often overstated as much of what
we have learned in microeconomics has remained intact. But there must be some
serious rethinking in mainstream macroeconomics and finance where the general
assumption of frictionless financial markets is a class A liability.
Melissa
Kidd, Lombard Street Research
Notable “winners” in this cycle have been
domestic demand-driven economies, such as Poland, who have been relatively
insulated from the sharp downturn in global trade.
Peter
Warburton, Economic Perspectives
Current winners: Resource rich nations with
small populations and healthy public finances, such as Canada and Norway; open
economies whose currencies have been free to depreciate during the crisis,
preventing even greater damage to the domestic economy, such as Korea; niche
jurisdictions such as Hong Kong and Singapore.
Future winners: Resource rich nations with
small populations and healthy public finances, such as Canada and Norway;
consensual societies that have pulled together during the crisis rather than
fractured along political or other lines, such as Germany, Switzerland and
Sweden; niche jurisdictions such as Hong Kong and Singapore.
Losers, present and future: Western
economies with proportionately large financial sectors, eg UK, Ireland;
countries with high structural unemployment and uncompetitive workforces
operating within inflexible currency structures eg Spain, Portugal, Greece;
wannabe nations that have borrowed extensively in foreign currencies, eg
Baltics and Ukraine.
Gerard
Lyons, Standard Chartered
The world economy is in the early stages of
a shift in the balance of power from the west to the east. The winners in this
New World Order will be those countries that have the financial resources such
as China and Qatar, or natural resources such as Brazil, large parts of Africa
and the Middle East, or that have the ability to remain competitive by adapting
and changing.
The need to achieve a balanced global
economy points to the US and the UK becoming relatively poorer in coming years,
as they have to spend less and save more, whilst the winners are the big
savings regions such as the Middle East and large parts of east Asia.
One longer-term issue is how quickly the US
and UK can bounce back. I think they will and thus they have the potential to
join the third group of winners, namely those countries that have the ability
to adapt and change.
Robert
Barrie, Credit Suisse
In terms of its make-up, the recession was
remarkably similar to previous episodes. The same highly cyclical parts of the
economy were most affected. Winners are harder to find than losers, but anyone
with an old-style tracker mortgage will have seen their payments fall to levels
they couldn’t have expected and anyone who invested in risky assets from the
spring time onwards will have made decent returns.
Sushil
Wadhwani, Wadhwani Asset Management
While there will always be some who do well
from a crisis, the associated recession has meant that the overwhelming impact
has been negative. In a relative sense, even though UK growth might surprise
the consensus on the upside over the next few months, I expect this country to
be a relative underperformer in the coming years. The UK has a comparative
advantage in the provision of financial and associated services in an
international context. However, the financial sector is likely to remain under
regulatory pressure.
Henrik
Braconnier, OECD
i. Parts of the financial sector have
remained in good shape and given high margins in eg lending to household the
sector is likely make substantial profits, unless regulators intervene more
heavy handedly. The sector as a whole is likely to shrink as a consequence of
the crisis though.
ii. Public sector employees have so far
weather the recession well, but are likely to be hit disproportionately in
terms of wages and job opportunities as consolidation in earnest starts.
iii. Welfare systems, essential public
services and pensions may get squeezed. Fiscal consolidation needs to be done
with one eye on poverty indicators.
iv. Exporting firms will be able to cash in
on the weak pound once global recovery strengthens.
Diane
Coyle, Enlightenment Economics
The winners will be those investors with
enough cash to invest in assets at bargain-basement prices.
The losers are the people losing their jobs
and homes. The level of savings held by the typical family is shockingly low,
certainly not enough to tide people over a long spell of unemployment. And we
know too that unemployment is one of the most significant factors in
unhappiness.
Lucrezia Reichlin, London Business School
This recession had huge redistribution
costs which were partly attenuated by fiscal policies. The question is who will
pay for the public debt that went with it. Probably the young. Also, high
unemployment implies permanent dislocation of people whose skills will be
inadequate to compete in the recovery.
Trevor
Williams, Lloyds TSB
the main winners have been the emerging
markets and the G20. More generally, it has been those with little debt. The
losers have been those with high debt.
Not sure about residential prices, our
housing economists at Halifax have a better sense of that than me.
Gary
Styles, Hometrack
Winners: Overseas cash investors in
property and equities, city traders, short term credit providers to household
sector ( eg money lenders offering loans at 2000 per cent apr on small amounts)
Losers: Taxpayers, retail banking staff,
pensioners (and those relying on interest income), estate agents and those
dependent on house move activity, students looking for first jobs.
This is likely to continue for some time
and will be further increased when the fiscal deficit is finally addressed by
higher taxation and severe cuts in public spending (not experienced since the
1930’s). What does this say about the priorities of the country when the
majority of the winners are also the least deserving – so much for the welfare
economics principle of polluter pays.
Carl
Emmerson, Institute for Fiscal Studies
Main groups of obvious losers are perhaps:
(1) those who have lost their jobs, in particular those who are now
experiencing a long period out of paid work and (2) those approaching
retirement who have seen sharp falls in the value of their equity investments
and houses coupled with increases in annuity rates, but with relatively little
time to adjust before their planned retirement date.
Hard to think of winners. But, at least in
relative terms, pensioners seem to have done okay so far. Those who were
already retired who onto nominal annuities (the majority of those who had DC
pension plans) will have benefited from the much lower than expected inflation.
In April the basic state pension will be increased by 2.5 per cent, relative to
a September 2009 RPI of -1.4 per cent (although it is also true that many
pensioners won’t have mortgages and therefore might face higher inflation
rates). Also noticeable that both main UK parties are claiming that they would
protect the NHS from the looming squeeze on public service spending which, if
true, would be likely to benefit pensioners more than most.
Ian
Plenderleith, Former Bank of England head of markets
We are all losers!
David
Blanchflower, former MPC member
Winners have, in the end, been the bankers
themselves. They took the risks and the benefits on the high side and the
electorate covered the low-side risk. The biggest losers have been the young.
Through no fault of their own they entered the labour market when we were in
the depths of a recession. The large size of the youth cohort has made matters
worse.
Andrew
Simms, Policy Director, New Economics Foundation
It’s hard to see who has won in the crisis.
Ironically, at the moment, the losers seem to have won. By that I mean that the
reputations of finance and banking are in tatters, and yet the public has
bailed them out and they have escaped meaningful and necessary re-regulation.
The other loser, more generally, is the myth of market and private sector
efficiency.
In his book The Great Crash (1929), John
Kenneth Galbraith noted that “The sense of responsibility in the financial
community for the community as a whole is not small. It is nearly nil.” If
there is a winner, it is the unequivocal conclusion that the market, and
finance in particular, depends on the public sphere and should be its slave,
not its master, and also that a well-functioning, open market utterly depends
on strong regulation.
Julian
LeGrand, London School of Economics
In previous recession, poverty and relative
inequality fell. This was because top and average incomes fell, while low
incomes were maintained by price-indexed state benefits. I predict the same for
this one.
Lena
Komileva, Tullet Prebon
Managers of funds, including the state, have
been the big winners. The big losers have been the shareholders and this
category includes the taxpayer.
Jonathan
Loynes, Capital Economics
The main losers of the crisis have been
those connected to the housing market and exporters. The former will continue
to struggle for a while at least. By contrast, exporters should do much better
over the next year or two as the lower pound boosts competitiveness and global
activity strengthens somewhat. Those in the public sector have been relatively
well insulated so far but will suffer from the coming fiscal consolidation.
Bridget
Rosewell, Volterra
The losers have so far been the
manufacturing sector – Birmingham has the fastest increase and highest level of
unemployment. This was partly driven by the high oil price and overheating.
Moreover this loss has been overshadowed by the banking crisis which had to be
dealt with but whose overhang is still causing problems. Relatively few bankers
have been as hard hit. There are as yet no obvious winners. Crisis is often
where new ideas emerge but they are still too embryonic to know which will be
the winners.
Ben
Broadbent, Goldman Sachs
No one has won, everyone’s lost. The
emerging world has come through the downturn far better than Europe, the US or
Japan. But that’s a relative statement.
Brian
Coulton, Fitch Ratings
The crisis has hit the advanced economies
hardest and within this those that had previously been most reliant on strong
credit growth. While the large benchmark AAA’s have shown the balance sheet
capacity to deal with the crisis and support their economies, the smaller
advanced economies with less financing flexibility and weaker initial fiscal
positions have been arguably the biggest victims (eg Ireland, Greece [though
largely self inflicted], Iceland). Emerging markets as a whole have had a
relatively “good crisis” but it is hard to see tem as outright “winners” and of
course those emerging markets with large imbalances, exposed to the credit
cycle in Eastern Europe have suffered very severe adjustments.
Michael
Saunders, Citi
There have been almost no winners from the
crisis other than insolvency experts. There are many losers, including
taxpayers hit by tax hikes, people who have lost their job, users of public
services that face cuts. Reputational losses have hit central bankers, bank
heads, finance ministers, bank regulators, and the belief in open markets and
economic stability.
Peter
Westaway, Nomura
Once the effects of financial crisis have
worked through, ironically important winners will be the export sector where
the rebalancing of the economy away from a reliance on domestic demand has been
facilitated by the necessarily lower real exchange rate.
Ad of course the losers have been the
financial services sector. The banking sector will inevitably be less
profitable and capital and liquidity regulations bite. But let’s not
exaggerate, the UK financial sector will still be enormously important..
Charles
Goodhart, former MPC member
Winners: Journalists, some economists,
pessimists
Losers: Bankers, politicians, optimists
Philip
Shaw, Investec
Winners – those seeking more regulation.
The regulators themselves are beginning to shrug off the earlier criticism and
are coming out on top. Economics, at least as a subject (if not economists!),
which is now an “in” topic.
Losers – the financial industry. Small
businesses that are unable to borrow.
Banks now face a higher costs of funding
through higher capital and liquidity requirements, so this is part of a
longer-term trend. One hopes that disintermediation will widen the pool of
additional financing available to SMEs and perhaps households, although how
this happens without a revival of the securitisation market, I’m not sure.
Danny
Gabay, Fathom Consulting
Beyond the odd hedge fund manager, it is
hard to think of any outright winners. The countries that built up the most
debt and hence their on vulnerability, in the boom are likely to be main
losers. The last line of defence is the sovereign, and it may now have been
breached.
On a more micro-level, the main winners
have been those in receipt additional government expenditure. Examples include:
those UK residents trading in old cars for a cash subsidy towards the cost of a
new one, together with those overseas car workers who have made the new ones;
those people in danger of repossession who have a received a contribution
towards their interest payments; staff and account holders at high street banks
that would otherwise have failed. The main loser will be the UK tax payer.
James
Knightley, ING
Winners – emerging markets in general
Losers – the Anglo Saxon economies in
general and UK in particular, Bankers, regulators, ratings agencies
Sir
John Gieve, Chairman of Vocalink and former deputy governor of the Bank of
England
In economic terms Australia , Brazil and
India have fared well and should continue to do so. In industrial terms, the
winners are oil/gas and many commodities – I expect them to get stronger still
in the upturn. (While China has continued to grow, it has been the result of an
extraordinary burst of government spending and forced lending and it faces a
difficult transition ahead.) The big losers have been Iceland, Ireland, much of
eastern Europe, and the unemployed.
In political terms the emergence of the G20
as the lead grouping has marked a step change in the authority particularly of
China, which I doubt will be reversed.
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