Tuesday, 25 January 2011

Chancellor George Osborne needs divine inspiration

Since retiring as financial editor of a UK national newspaper nearly two years ago, I’ve endeavoured to look at the world beyond my old patch since launching this blog. But today’s fourth quarter growth figures are so awful I feel compelled to share my take on the UK economy with you.
Output fell 0.5 per cent in the final three months of 2010. Stripping out the effects of December’s freeze left the economy marking time.
Another quarter in negative territory will tip the UK technically back into recession and the double-dip bogeyman will be at the nation’s door.
It’s unlikely to happen. Today’s calculation is almost certain to be revised upward and the lower value of sterling should inspire our exporters in the current quarter.
But whatever way you look at it the British economy is groggy and we’ve yet to feel the effects of higher VAT and other austerity strategies of Chancellor George Osborne (pictured above).
The Bank of England will be hard put to begin to raise interest rates to counter rising inflation. This is bad news for savers – but good for business and home buyers alike.
It’s been a bad week so far for Osborne. Today the finance minister was ridiculed for blaming Mother Nature for the poor fourth quarter to the extent he did, while yesterday the swansong speech of Confederation of British Industries departing director-general Sir Richard Lambert lashed the Chancellor for the absence of a growth policy.
There must be plenty of LibDems wondering what sort of pig-in-a-poke deal they signed up to when they went into Coalition with the Tories.
Just when it looked as though Labour heavyweight Ed Balls had missed his moment, he’s back in the ring slugging it out with the Coalition front bench.
He wasn’t his leader Ed Miliband’s first choice as shadow Chancellor. His enemies won’t allow him to forget that he owes the job to the family strife that forced his predecessor Alan Johnson to quit.
In recent days Balls has been at pains to move away from his reputation as a Brownite bruiser. Balls has seized his second chance. He’s promised to fall into line behind Miliband and renounce his old divisive ways.
A wise move because voters’ memories are short-lived and couple of years out if the economy is in a real mess, they’ll have forgotten it was Labour that got us there in the first place – and will be blaming a Coalition government perhaps coming apart at the seams.

7 comments:

  1. Public wage freeze for the sixth ccnsecutive year; this last happened in the 1930's; ever decreasing disposable income, 2 fuel duty increases, one still to come; VAT up from 15 to 20 per cent over 2 hikes; severe curtailing of public spending; huge student fees; very reduced work and unemployment in the building industry and the public sector, severe transport increases, substantial debt amongst the general public etc,

    We are still involved in a huge experimental strategy which is resulting in rapidly falling living standards for some time to come. GC, How many years of export led growth and at what level do you think it will take to restore living standards and employment to what they should be, now and in the future, taking into account that we are just at the start of this experiment?

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  2. If I had any sensible answer I'd be up for a Bank of England job. GC

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  3. Probably the only sensible thing to say is to wait for the next quarter's [up/down/no change] growth figures and try to be sure that they are not being manipulated at all.

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  4. Bank of England job, eh? Is there one going?

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  5. What? no plan B, George?

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  6. No plan B necessary, the 'A' team are in charge [mm....].

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  7. The USA keynsian model is working better currently than the UK's sh.t or bust.

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What do you think? GC