Welcome to Zombie Britain Flatlining economy leads to paralysis in jobs market, housing and youths leaving home
22:32 GMT, 7 December 2012
The number of workers in jobs for less than one year is at its lowest point since figures began in 1985
The flatlining economy may be in a worst state than it looks, according to a new method of assessing the nation’s fortunes.
Jobless figures, house prices and government debt do not show the whole picture, say creators of the so-called zombie index.
What matters instead are such issues as how often people change job, leave the shelter of their family home or move up the property ladder.
According to these measures, which were identified by the Economist magazine yesterday, Britain is stagnating in the way that Japan has for two decades.
The lack of mobility suggests that workers prefer to stay stuck in jobs they do not like for fear of being ‘last in, first out’ if a new post does not work out.
The number of workers in jobs for less than one year is at its lowest point since figures began in 1985.
And, according to the latest Land Registry figures, the housing market is also at a standstill as owners wait for a better time to move.
Only 66,700 properties changed hands in October, compared with 113,456 in the same month in 2006.
Research by the Office for National Statistics has highlighted a ‘boomerang generation’ of 20-somethings who live with their parents.
Two million young men and women now do so – 20 per cent more than in the 1990s.
One in three men and one in six women between 20 and 34 are thought to live as ‘fridge raiders’. In Japan half of people in the same age group are still in the family home.
Zombie theory holds that these young workers provide employers with cheap temporary labour.
At the same time, a diminishing number of well-established employees cling like limpets to their better-paid jobs.
The zombie effect has also spread to businesses, which are tending to stand still rather than expand or contract.
specialists R3 last month reported an increase of 10 per cent in
companies that can manage to pay the interest on their debts but cannot
afford to make a dent in the loan itself. These ‘zombie businesses’ now
According to the latest Land Registry figures, the housing market is also at a standstill as owners wait for a better time to move
Lee Manning, president of R3, said: ‘The phrase zombie business has been bandied around quite freely and looking at companies that can only service the interest they owe, but not the debt itself, is a practical definition of this term.
‘I would add that the phrase also extends to those companies who are currently over-geared and cannot pay back the debt in full.
‘We know that banks are displaying greater forbearance on existing debt, but when a business cannot get extra lending it will be unable to expand.
‘Others would argue that this stagnation ties up capital that could be used for other, healthier businesses.’
The writer of the Economist’s Bagehot column said that zombie behaviour was rational, adding: ‘The problem is that in other countries that have learned to live with it, such as Japan or Italy, adjusting to a world in which nothing much is happening tends to result in atrophy.
‘There are some signs that Britain is already becoming a little Japanese, and not just because it is now popular to watch women in bikinis eating live cockroaches on prime-time television.’
PRIME MINISTER SIGNALS BANK BREAK-UP
Competition could be boosted by breaking up nationalised banks and giving customers a single transferable account number, David Cameron suggested yesterday.
The Prime Minister signalled that he favoured the idea of making it easier to switch between banks.
He added that ministers would consider the need to increase choice on the High Street as they sought to return RBS and Lloyds to the private sector.
The remarks will be seen as an indication that selling off the vast, state-owned lenders in chunks could be an option.
The big five – Barclays, Lloyds, HSBC, RBS and Santander – dominate the marketplace. Mr Cameron said he was frustrated that major banks were not passing on lower interest rates to businesses and homebuyers.
‘We all read about these ultra-low interest rates,’ he said. ‘I know a lot of people feel, businesses feel, homeowners feel, particularly ones trying to buy, “Why can’t I get hold of these low rates”
‘The banks deeply damaged by this collapse and crunch in 2008 have been trying to nurse themselves back to health.
‘But frankly, we’ve run out of time and we need to make sure those banks are releasing money to businesses and homeowners at attractive rates.’
On a visit to Redditch, Worcestershire, the Prime Minister said the Bank of England’s new funding scheme means banks could only borrow at low rates if they pass on the benefit to customers.
But he said other steps might be necessary. ‘We’ve got an opportunity, as we own these banks, or part of these banks, when we put them back into the private sector, how do we make sure we create a more competitive market’
Banks are already introducing a system to make it possible to swap accounts in seven days by next September.
However, the industry has argued that allowing customers to keep a single portable account number would be too costly and time-consuming.
Downing Street aides insisted that no plans to break up the big banks had been drawn up.