You don’t have to be a Keynesian* economics major to understand that unemployment is a lagging indicator that takes many, many, months for changes in economic factors to manifest themselves and given that the Referendum has only been formerly confirmed in the last few months, it is inconceivable that this is to blame for the downturn in the Economy.
You could say that the Economy is slowing since it is being affected by international factors where other world economies are also shrinking where unemployment is one of the first casualties and this would be credible.
You could also say that the property recession created by the Chancellor’s Autumn Statement of 2014 and the subsequent omni-shamble Budgets, which made dramatic changes to Stamp Duty, Non Doms and Buy-to-Let investments in aggregate are starting to effect the growth of the Economy as I have been ‘banging on about’ for all this time in my previous blogs.
Lets face it, for the Economy to have recovered from the dark and dismal days of 2008 where the Budget Deficit was of ‘banana republic’ proportions is quite a feat and credit must be given to the government for inducing growth whilst still maintaining austerity.
Yes, the deficit came down from £160billion odd to £70billion but here is the rub; in the last year or so there has been no further deficit reduction and the Treasury is struggling to find further savings.
If you look at the projections between now and 2020 where the Chancellor has promised debt repayment at the end of the period, you will notice that most of the deficit reduction takes place in the last 18 months. This assumes a reasonable standard of growth and Tax Receipts that I don’t believe will be the case.
Due to the Manifesto promises made before the last Election on limiting changes to taxation whilst maintaining front line welfare spending, there is very little else for George to ‘turn to’ in order to meet his stringent, self imposed, financial objectives.
With breathtaking arrogance Stamp Duty, which is an easy tax to impose, was raised by a minimum of 80% and a maximum of over 100% and together with the changes to Non Doms will effectively raise no money at all for the Treasury but instead will loose revenue. Calming the markets is never a bad thing but ‘spooking’ them is ‘darn right’ stupid and what was the purpose of all these initiatives is the question that hangs in the air.
After the fiasco of the attempt to impose changes to the tax credits and more recently the invalidity benefits, the Chancellors economic prowess has been seriously undermined and that is before we get to the vexed subject of the Referendum campaign.
Rolling out the American President, who enjoys a domestic, historic, low personal rating and the ‘motley’ selection of past US treasury secretaries to endorse the ‘Remain’ initiative is I’m afraid a sign of desperation. Is there anything that the Prime Minister and Chancellor will not do to support their campaign, that looks less like protecting the national interest of the UK and more of preserving the Prime Minister’s dignity upon retirement and the future job aspirations of the Chancellor.
Their tactics under ‘Operation Fear’ have become so blatant and transparent that perhaps they will blame the bad weather on to the Brexit campaign.
They have ‘boxed themselves into a corner’ with nowhere else to turn to and I fear that this litany of imprudence will inevitably lead to their demise.
All we are short of in this ‘Laurel & Hardy show’ is an inane comment from Mr. Carney pontificating as to when Interest Rates will rise in the UK. Then we will all be doomed.
* John Maynard Kenes, esteemed economist