A leading Birmingham economics expert believes China’s financial problems could have serious implications for the UK’s economy.
The recent drop in share prices across global markets is being put down to falling oil prices and a slow down in China’s economy.
British banks have been among those to invest in the Chinese economy. Dr Steve McCabe, who’s Director of Research Degrees at Birmingham City University’s Business School, said that could have a direct impact on industry here.
“There’s been a lot of investment in China by the banks in Europe, if China’s growth continues to dwindle then there’s less chance of them getting their money back, so that will influence lending to businesses here.”
The slow down will inevitably have an impact on exports. According to Government figures from November 2015 5.8% of UK exports are sold to China.
It’s not just exports to China that could suffer though, Dr Steve McCabe explains how it could damage UK sales to other countries.
“We all have an interest in China, it may not make up a huge part of the export market, but it could impact Germany, who have a much bigger interest in China – which could then impact the Eurozone, which will then impact our exports.”
Despite these worries, according to Dr Steve McCabe, a financial crash on the scale of 2008 is unlikely – although he warns the economy’s in for a bumpy ride and there are potential problems with people’s perceptions.
“If there’s a pessimistic outlook, there’ll be less opportunities to sell goods, which could mean workers being laid off.”
It’s not all bad news though, Dr Steve McCabe believes some companies look well set to cope with any fluctuations in the economy – and said India could provide some of the solutions.
“Jaguar Land Rover’s now producing more cars than Nissan with an expanding market in India and there is a hope that India could take up some of the slack caused by the slow down in China.”