Transcript Economic Scenarios and Health Care

Economic Scenarios and Health
Care
National Optometric Conference
5 November 2010
Roger Martin-Fagg
Chart 1.16 Broad money and nominal GDP
(a) Recessions are defined as at least two consecutive quarters of falling output (at constant market prices) estimated using the latest data. Recessions are assumed to end
once output began to rise.
(b) The series is constructed using M4 growth prior to 1998 Q4, and growth in M4 excluding intermediate OFCs thereafter. For the definition of intermediate OFCs, see
footnote (a) in Table 1.C.
(c) At current market prices. The latest observation is 2009 Q4.
The UK Savings Ratio, source: NOS
Latest data point 2nd Q 2010
Year on year
10pc
8pc
6pc
4pc
2pc
0pc
-2pc
-4pc
82
86
90
94
98
02
06
08
10
12
14
UK GDP 3rd Quarter 2010
Source: NOS Oct27 2010
UK Real GDP The RMF View
Percentages
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
-7
2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011
Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
1q
4q
Chart 2.7 Financial balances by sector
(a) Recessions are defined as in Chart 2.5.
(b) Includes non-profit institutions serving households.
(c) Excludes public corporations.
Conclusions
The Banking system in the West needs another three years to stabilise its balance
sheets. The availability of Bank finance will continue to be limited.
The USA will experience double-dip from November . Next year its GDP will shrink
by 1%
The UK will experience double-dip from March 2011, shrinking by 1%
Europe will also contract next year, the south by more than the north, on average
1.5%
Interest Rates: central bank rates, no change but market rates, will drift upwards.
Inflation: this will not be a problem, deflation is more likely.
Property prices in the West will fall by another 10%.
The Central Spending Review
The NHS budget is not really protected. The internal rate of health care inflation is
around 6%, the Treasury will allow a 1.15% yoy increase in real terms , but this uses
their inflation figure of 2.25%.
In effect the NHS will have to ‘find’ around 3.3Bn each year of cost saving over the
next 4 years. This out of a total budget of £110 Bn.
I would expect the NHS to look to their suppliers to increase the value they offer,
with more for less.
I would expect too, that internal processes could be made more cost effective.
Expect at least 5 years of relative austerity.