Bunged Up

The headlines will tell you that we avoided recession (a treble dip no less) but this will blur the real story. Do not be blinded by the lights……

 

If ever you and / or Westminster wanted confirmation of the state of the UK economy on the back of the austerity cuts, the latest figures from the Office of National Statistics is a timely reminder……

 

Q4 2012 the economy shrunk by -0.3%.

 

Q1 2013 the economy grew by 0.3%.

 

Over to Carol Vorderman for the calculation…..the net result……0.0% growth for the past 6 months.

 

Remember……in the budget last month the projection for UK economic growth is 0.6% in 2013 and 1.8% in 2014. These projections determine income for the Government through tax revenues. If we don’t hit them, then they must borrow more to bridge the gap in income v expenditure. Considering our current debt level to cover this gap is £120.6 billion, how is the current plan to reduce it to £0 going to be achieved by 2017-2018?  

 

At risk of sounding incredibly repetitive, if Plan A isn’t working then doing more of Plan A as a solution seems ludicrous.   

 

So……we have avoided a treble dip recession……just! The figures are ugly though.

 

Economic constipation continues……

73.6%

There are 3 kinds of lies……lies, damn lies and statistics. Benjamin Disraeli take a bow – a great quote that spans the passing of time perfectly. All the more interesting as the Office of National Statistics (anoraks and sensible shoes come to mind) has released data regarding the Government’s borrowing position.

 

Some interesting reading:

 

1.  Despite all of the austerity cuts, the Government borrowed £120.6bn in the last financial year……only slightly lower than the amount it borrowed the previous year (£120.9bn).

 

2.  Government borrowing is now at a level equivalent of 75% of all money made in the UK.

 

So the killer question……if the Government wants to eliminate the budget deficit by 2017-2018, what tricks does it have up its sleeve as Plan A just isn’t working?

 

Apparently, 73.6% of all statistics are made up. Let’s hope Benjamin Disraeli is right……and these are simply a lie. Please!

The Magic of 9 (An Update)

Back in January I stated that “it started with the banks and it must end with the banks” in my blog ‘The Magic of 9’. (http://stevesmithlive.blogspot.co.uk/2013/01/the-magic-of-9.html) Well, since then there has been very little evidence to change that opinion. In fact, the situation has been made worse……

 

Enter the (soon to be outgoing) Govenor of The Bank of England, Mervyn King. His last throw of the dice could actually be the most dramatic to our economic prosperity / recovery……

 

In short, The Bank of England is strongly recommending that UK banks must raise a total of £25 billion urgently to help guard against and fund predicted losses / fines of around £50 billion over the next 3 years and avoid the need for further bailout. Money that could have been lent out to the Private Sector to fund business growth leading to job creation rather than now sat stagnant to pay for the previous greed that is to come back and bite hard on the banking arse.     

 

Even more reason for the banks not to lend and further delays ‘The Magic of 9’.

 

The economic constipation continues.

R. I. P. Lady Thatcher

She inspired, she divided.

 

She was Britain's first woman prime minister, the first to win three consecutive elections and left office having never lost one. Yet many will never forgive her for the deep divisions (economic and social) resulting from policies rooted in her belief that "there's no such thing as society".

 

Her political philosophy and economic policies emphasised deregulation (particularly of the financial sector!), flexible labour markets, the privatisation of state-owned companies and reducing the power and influence of trade unions. Thatcher's popularity during her first years in office waned amid recession and high unemployment, until economic recovery and the 1982 Falklands War brought a resurgence of support, resulting in her re-election in 1983.

 

Memories and opinion of Lady Thatcher will always be divided……you cannot be a world leader for such a period of time without it courting disagreement. The response to her death is proof of that.

 

I disagree with many of the things that she did. I come from a family where generations worked in mining and her legacy has left a foot print in the North East that is still being felt 30 years on.

 

Yet she helped to change the world with her part in stopping the cold war by having the ‘balls’ to inspire and bully Reagan and Gorbachev. Having recently visited Berlin, it is evident that she changed millions of lives in such a positive way as a consequence. Not just in one city, but throughout Eastern Europe. President Obama summed this up perfectly by stating that “the world has lost a champion of freedom and liberty”. Ask anyone in Eastern Europe if they disagree. Her respect has been well earned surely?   

 

Many words will be written and spoken. Many tributes will be paid. Some will mourn. Others will celebrate. Her legacy and history will judge her now......

 

She inspired, she divided.

 

Buggering Up Bank Bonuses

Well, it looks like the EU will vote in favour of a cap on bank bonuses this month. Recent discussions have highlighted that only the UK is against the proposal that would see a law being passed in Europe to cap bonuses to 100% of a bankers annual salary. The hardship!

 

Given the casino banking we are still paying for through austerity measures, why is our Government so against it?

 

This one is dead simple……

 

London is the financial capital of Europe and a major centre for financial services in the world. So important is it to the UK economy, that £1 out of every £10 that is made in the UK comes from London’s financial centre. Restricting what can and can’t be paid will simply drive staff and companies to relocate to other areas of the world……thus reducing the amount of money being made for the UK’s coffers as a consequence.

 

Damned if we do. Damned if we don’t. I guess we made our bed.