British Consul-General Talks Economics in Smyrna

Annabelle Malins, Her Majesty's Consul General, spoke Tuesday about Britain’s economic recovery and what that means for the United States at a meeting of the Smyrna Rotary Club.

Malins has served as the British Consul General for the Southeast since 2009. Her responsibilities include leading a staff that works throughout the region to support British nationals and to promote public policy, scientific cooperation and trans-Atlantic trade and investment.

Britain’s economic woes are similar to those of the United States, Malins said, including a sky-high budget deficit. Britain’s steps toward recovery began in May 2010 when a coalition government was formed between the Conservative and Liberal Democrats. The new government then began taking early action to handle the deficit, which Malins attributed to the unsustainable growth model implemented by the previous Labor administration.

“The headline there is to reduce our structural deficit to zero by 2015, 2016,” she said. “So they gave themselves a five-year kind of glide path to get themselves a better position to cut the debt-ration. Of course it’s not all just a story about cuts, it’s also about achieving sustainable growth. They’ve actually built a new growth model driven by investments and exports and more evenly balanced across the U.K. geographically as well as across the sectors.”

The new growth model is aimed at cutting the amount of borrowing over a five-year period. The new government plans to achieve this by implementing 77 percent cutbacks to public spending. The remaining 23 percent will come from tax increases.

Malins hopes that Britian’s economic recovery will also be stimulated by the 2012 summer Olympic and Paralympic games, which will take place in London. So far, the infrastructure to support the games is on time and on budget and all the major venues have been completed, she said. It’s estimated that the games will bring in about $3.2 billion in tourism revenue to the U.K., she said.

Britain’s economic recovery is deeply linked to the United States and vice versa. Malins pointed out that the relationship between Britain and the United States is the largest bilateral trade and investment relationship in the world and supports an estimated 14 million jobs.

The Southeast especially benefits from this relationship. The six states Malins works with - Alabama, Georgia, Mississippi, North Carolina, South Carolina and Tennessee - have a combined economy similar to Canada’s gross domestic product.

Malins said Britain is very interested in partnering with this market. This can be seen in Georgia where British investments supply about 30,000 jobs.

She also added that the though it would have to be structured differently, the United States could benefit from a deficit-reduction plan like the United Kingdom’s.

“Actually, I think if there’s any lesson at all it would be that taking action on the deficit is going to shore up credibility in the economy overall and it’s a good thing to do it now,” she said. “I think that’s a very general lesson, but that’s one we can be confident about.”

There is already evidence that Britain’s recovery plan is working. The plan has the support of the International Monetary Fund and the Organization for Economic Co-operation and Development. Britain’s AAA bond rating was recently affirmed and at 7.8 percent, its unemployment rate is 1.3 points lower than the U.S. rate.