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Will the UK Make Painful Reforms in 10 Months?

Excuse my philosophical mood – but there are times in life when you feel the urge to take stock of the world. I'm at such a crossroad. On Friday, I'll hang up my microphone for the last time this year before I leave CNBC to have my first baby.

It all makes me wonder what kind of world I'll come back to in 2011. And for that matter, it rather makes me wonder what kind of world I'm leaving behind. We have experienced massive turbulence, which has seen some banks nationalized, a few big companies fail and millions lose their jobs. But fundamentally little has really changed.

Unemployment is higher, but much of the spare capacity created by the recession has been absorbed by cuts in wages and working hours. We've lost the likes of Woolworths and Zavvi, but there's no tumbleweed blowing down my local high street. And our local Mothercare is inexplicably buoyant…

All of this looks good, but check the data for signs of a return to economic activity and you'll struggle. Does growth really count when it's just 0.1 percent? Put it this way, I've grown 12 percent in mass in the past eight and a half months. That's what I call convincing.

The symptoms of poor economic outlook are all there. Mortgage lending has fallen again, net borrowing by businesses is dire, public finances are deteriorating faster than the government expected and retail sales are languishing in the doldrums, according to January data.

More worryingly, it is hard to see what could change things. At the big end, the government is losing its capacity to stimulate growth; at the small end of things, entrepreneurs are starved of credit. It makes me inclined to think that the UK economy is a dead horse that's not worth flogging.

By the time I will have waded through 10 months of nappies, bottles and teething rings, some things will undoubtedly have happened – there will have been a few more quarterly earnings seasons and one general election, for instance.

But there are also some crucial 'maybes.' Real financial regulatory reform? Government exit from bank ownership? Courageous fiscal consolidation? A genuine shift away from spend-today-pay-tomorrow culture?

We seem to be out of the worst of the bad times. Now is the time to make the painful changes that can move our economy into a new era of understanding of risk, reward for genuine entrepreneurship and sustainable growth.

I shall be watching and hoping- between my trips to baby swim club and baby singing group, that is.

Contact Europe: Economy

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