Tuesday, 26 June 2012

The state we are in, and of the economy.

Puzzled why David Cameron was keen to engage us in a big discussion about welfare benefits? - even though he said no changes would happen now, but may be included in the Conservative manifesto for the next general election, most likely (unless the Coalition falls apart) in 2015. Surely you would think they'd be working hard on a plan to generate growth, that we need, to drive the economy out of recession.

Or why George Osbourne rushed out on TuesdaIsy to announce a delay in the introduction of the proposed 3p rise in fuel tax.

Let's think, me thinks....a suggestion did it have anything to do with the dire state of the economy by any chance?

The Office for National Statitics today published details of the state of public sector finance for the month of May, 2012:

The main statistics show, that in May 2012, for measures excluding financial interventions:
  • the public sector current budget was in deficit by £16.9 billion; this is a £2.7 billion higher deficit than in May 2011, when there was a deficit of £14.2 billion
  • public sector net borrowing was £17.9 billion; this is £2.7 billion higher net borrowing than in May 2011, when net borrowing was £15.2 billion
  • public sector net debt at the end of May 2012 was £1013.4 billion (65.0 per cent of GDP). This compares with £921.3 billion (61.3 per cent of GDP) at the end of May 2011
  • The central government net cash requirement was £13.3 billion, a £2.5 billion higher net cash requirement than in May 2011, when there was a net cash requirement of £10.7 billion.
A report by Reuters - 'Public borrowing rises in May as income tax falls' by Fiona Shaikh and Matt Falloon says -  Tuesday's figures cast doubt over the government's ability to meet its deficit target of 92 billion pounds in the 2012/13 fiscal year - a total which includes the asset-transfer effect.

Even Mervyn King the Bank Governor can only see dark clouds on the horizon, "We are in the middle of a deep crisis, with enormous challenges to put our own banking system right and challenges for the rest of the world that they are struggling with," King told parliament's Treasury Committee. See Reuters - 'Gloomy BoE sees outlook darken'.

And finally for an alternative narrative on David Cameron recent attendance of the G20 summit read  'Cameron G20 missteps point to wider UK problems' an article by Peter Apps, Political Risk Correspondent of Reuters.

In a damaging rebuff to the Prime Minister former Clinton official Kupchan said to   Reuters -"London's relevance on the world stage seems to have declined since he became prime minister. Part of that might be inevitable given the circumstances ... but Cameron's statecraft is also leading to self-isolation."

1 comment:

The Red Flag said...

So, here we are, 4-5 years on from the start of the crash (dependent on which side of the Atlantic you live).

Over 80% of the cuts have yet to be even announced let alone put in place. Of the ones that have been announced most have yet to be enacted.

Tens of thousands of public sector workers have lost their jobs as have tens of thousands of private sector workers.

King has announced the current economic situatuation will continue for at least another 5 years and many serious economists and economic think tanks are saying at least another decade and adding that we haven't hit the worst yet.

We have trapped ourselves into an economy that relies on consumer spending in order to grow whilst at the same time employers are saying pay freezes (and even pay cuts) are to continue.

Low interest rates are destroying peoples savings and destroying the future pensions of the DC schemes that the current workforce are in.

And even the main stream tory voters no longer believe that No10 is going in the right direction.

A couple of years ago I read a very complex article about all this in which the author believed that ther will be no recovery in the west. That we in the west are going to live through a period of severe economic decline and a big reduction of living standards until we reach 'parity' with the developing economies of Asia. He further added that politicians would be faced with 2 choices - do it quickly and get it over and done with (accepting the severe civil and political unrest it would spark), or do it slowly over 2-3 decades so that people grew into it and didn't notice it so much.