Politics – The Papers React to the News of the Economy and its Current Woes
Osborne “Savaged” over his handling of the economy Poor old George. There he was a few short weeks ago boasting that under his management we had the fastest growing economy in the developed world. Even if it was true then it is not now and the papers have told him so. The guardian talked of a blow to the Tories’ strategy of using a resurgent economy as the “springboard” for the general election campaign. It said “Data from the [Office for National Statistics] added spice to the political battle over economic competence when it said gross domestic product per head – one measure of living standards – was rising but the 0.6% increase in the third quarter still left the measure 1.8% below its pre-recession peak.” Even the Telegraph got in on the act pointing out that net disposable income was static including a pointed cartoon at George’s expense. It then went on to blame those pesky Europeans (nothing changes). The Daily Mirror spoke to David Blanchflower, who was an economist at the Bank of England. He said that the results on the economy may George “look like a buffoon”. The savaging came from Danny Alexander the Lib Dem chief secretary to the Treasury. He complained that £60bn of the spending cuts demanded by George are unnecessary, some of us would argue that they are ideology driven. He said “The Tory agenda to keep reducing public spending beyond what is necessary would result in the wilful destruction of important parts of our public services. That is not appropriate or right for this country.” What happens when your claim to be the only party that can run the economy falls apart?
It’s The Economy, Stupid!
Who Would Have thought that the Economy could be the Tories’ Achilles Heel? It is official, the UK economy grew slower than thought previously. It grew by 2.6% in the 3rd quarter of 2014 rather than the 3.0 % that was estimated. But, hey ho, that is still growth so where’s the problem? As David Kern, chief economist at the British Chambers of Commerce, said: “The stark revision in annual growth confirms that the pace of recovery is slowing. The most concerning aspect of these figures is that the current deficit has risen to an un-sustainably high level.” The deficit? I thought that was going to be destroyed by all the cuts? No. (The problem with politicians, one of the problems, is that they use “deficit” and “debt” as if they are interchangeable, which they aren’t. This is true of both main parties, and the Liberals). The Tories were referring to the debt, the structural debt, probably. Also, revised down was the gross domestic product (GDP) which is one the primary indicators used to gauge the health of a country’s economy. It represents the total value of all goods and services. Think of it as the size of the economy. The current deficit now stands at 6% of GDP. Which is a record, but not one that Gideon, sorry George, is going to boast about. In fact, the current account deficit has been above 5% of the GDP for the last 15 months which is the worst record since the early 1950s. Who cares? We all should. If you add up all the debt in the country, the government’s, businesses’, personal etc. the total debt is about 500% of GDP. Put like that we should all be scared. It will be almost impossible to get the debt burden down with the size of the current account deficit. The economy has always been by saved by the positive balance that we enjoyed between the return on our investments abroad and the payments we make to foreign investors. Trouble is, even that has been in deficit since halfway through 2012. So, we really in the deep do-do. Or are we? One way out could be to keep selling our best, blue chip companies, and any other assets we have to foreigners. But, how long can that go on? Right up to the point where the foreign investors think that we can not repay or service our huge debts and with the scale of our growing debt…………… It’s the economy, Stupid, and it is not good,
Phil’s British Heart Foundation Donation – you know it makes sense
