Tag Archive for uk economy

Does Britain Risk a Debt Filled Future?

Among the corridors of economists and financial analysts, there has been largely quiet praise for the UK’s approach to the global recession, the banking crisis and the high levels of debt which have resulted.  The cut backs in Government spending are of course not everyone’s prescription for the troubles and equally many suspect it has hindered and slowed the recovery.

The reality is that much of the UK Government’s spending levels were simply unsustainable and austerity although unpopular would have been inevitable at some point in time.   Increased growth obviously impacts these figures too and a healthy growing economy can also be used to reduce debt levels in tandem with any spending cuts.

BBC News Streaming

For several years this reduction in Government debt levels has been the main focus for the economy, however the Brexit decision seems to have thrown these goals up to the winds of political expediency.   If you watch the UK news and political reports, austerity now rarely get’s a mention – apart from the brief distraction of the Olympics, the talk is all about leaving the European Union.   The reality is that this decision is likely to have a much bigger effect than any trimming of welfare payments or cutting back government departments.

The most urgent problem though is the uncertainty, the simple fact that no-one seems to know what is happening. The protagonists who promoted the leave campaign now seem to have stepped into the background, leaving a variety of pledges and promises in the dust.  The truth was none of these were ever guaranteed and indeed many simply contradicted themselves, and in truth will probably be set aside mostly by the new government entrusted to deliver some sort of Brexit result.

It looks like nothing much is happening soon, and the uncertainty looks likely to continue for months and possibly years to come.  There is a suspicion that something is happening behind closed doors, in the corridors of power some sort of workable compromise is happening but we may just have to wait and see. Until then it’s almost certain that economy will start to shrink, maybe slowly but the current situation is not conducive to growth.

Business investment has already hit a 10 year low, as companies wait for direction.  There are lots of rumours of impending trade deals and agreements, but none of these can actually be implemented until the country leaves the European Union so all the talk is very premature.

Many seem to see the ‘free trade deals’ as a passage to huge prosperity and a sales fueled bonanza for a UK freed from the shackles of the EU.  The problem is that ‘free trade’ can also be extremely detrimental to an economy as well as being beneficial.  It’s why these agreement sometimes take a decade to negotiate, a bad deal can be much worse than no deal at all.  International trade, even is you simply use the base economic model of comparative advantage can be a complex and difficult area. Establishing a ‘free trade’ agreement sounds like a simple, beneficial thing to establish however it’s implication is that you offer trade advantages over other countries, which can have huge knock on effects in an economy.

The worry for the UK economy is on many fronts – the indecision, the confusion and what is actually going to happen.  Sometimes no decisions are actually worse that ‘bad decisions’ – government debt is only going to increase while the confusion remains.

Jim Harvey

Author of Online IP Changer

The Bank of England Election Blackout

Over the last few governments, there has been a move to distance the Bank of England from the political process. Successive governments have given it more power to act independently from the ruling party.  It’s a process which has been a success and we will see another aspect  of this during the election process in the UK over the next few weeks.

britain-20433_640

Although it may be more accurate to say ‘ you won’t see’ as the Bank of England is now in blackout mode until the election is over.  The ‘purdah’ rules came into place at  the dissolution of parliament on the 30th March and  they state that no BoE officials can make public statements until May 7th when the election takes place.

It’s likely to be a frustrating time for business and those in the financial sectors, as the announcements from Mark Carney or any other officials on a host of important committees are an extremely important source of information.  They’ll hear nothing from the Monetary policy committee, the Financial Policy Committee or any of the other bank regulation units that reside under the Bank of England.

Of course, all these functions will still be busy working as normal.  There will still be neutral updates and releasing monthly figures as normal.  The Bank of England will still make all the decisions it needs to such as controlling inflation, setting interest rates and all the other policies it controls.

These ‘purdah’ rules are an important part of the UK’s democratic systems which are designed to maintain the political impartiality of several important sectors of the UK.  They include the UK Civil Service, who are the huge sector of officials that keep the State machinery running.  The idea is that no-one in any of these important sectors can influence the result by making any sort of statement which could have political connotations.

This election might involve an even longer blackout this time as there is a distinct possibility that no single party will win control.   Most of the opinion polls are pointing to a ‘hung’ result which means that some negotiation will be required to form a government with an operating majority.  This would require an even longer blackout than normal as it might be required until a Government is put into place.

The election promises to be hugely exciting with no-one really knowing what will happen.  The pollsters seem genuinely unsure about how it will all unfold, there will though be a huge amount of media coverage.  If you want to follow the various parties and economic implications then the main media company to follow is the BBC.  The British Broadcasting Corporation is renowned for it’s political coverage and you can access it all from their web site and the BBC iPlayer application.  If you are based outside the United Kingdom though you will need to use a UK based VPN such as this one, in order to access the coverage.  It effectively hides your location and routes through a secure UK server in order to access any content only available in the United Kingdom.

Joseph Benyon

Further Information

UK Economic Recovery- Tech Driven?

The UK economy took a little breather in the last quarter of 2014, with economic growth slowing down across many sectors.  However there were exceptions which demonstrate that certain areas of the UK economy are driving forward the recovery with others relatively stagnant.

One of the most important surveys in the last few weeks is that of the KPMG/Markit UK report which tracks various economic indicators.  It is particularly interesting to monitor the performance of the UK technical sector and compare it with other areas.   The UK Technical sector has been of increasing importance to the UK economy for many years and it seems that it growing by the year, the last quarter of 2014 demonstrated the highest performance gap for the last 8 years.

The tech sector continues to outstrip virtually every other sector of the economy, with new business gains, new products and even allowing for slow cost inflation (which can often effect demand for technical products).  Many new product launches helped perhaps inflate this difference but it has also resulted in a higher investment spending across the sector.

This is of course important to jobs as well and there is evidence of substantial employment increases to help fuel this growth.   Employment in the IT sector is also traditionally fairly well paid and can contribute to other sectors and overall growth of GDP.  The outlook remain positive, although perhaps with some slight reservations along with the rest of the economy.

There is no doubt that the IT sector is becoming in increasingly important to the UK economy.  There is also evidence that the pattern of employment in the UK is diversifying from the traditional roles.  There is much evidence to demonstrate  that more and more people are becoming self employed or working across several roles rather than the standard 9-5 one company employment model.   It is important to develop these sectors as they typically create highly skilled, adaptable and well paid employees.

One area which has shown a huge increase is that of people who leverage the internet to provide their main source of income.  Many thousands of people now do business purely online, with virtual businesses contributing a small but growing contribution to the internet.  Digital products and services like this from Ireland are bought and sold all across the world, providing income for thousands.

Jane Hallins

http://www.anonymous-proxies.org/

UK Economic Growth is Fueled by Consumer Spending

There are not many convincing recovery stories across Europe yet, but the growth being seen across the UK economy over the last 18 months is genuinely encouraging.  Whilst most European countries hover around 0% growth rate and many looking at more recession, the UK economy seems to be moving forward.

british-107866_1280

However there is a worry that this might not be a sustainable growth and the recovery is simply being pushed by increased consumer spending.  Today the news is filled with hysterical shopping scenes as the American ‘Black Friday’ promotion is embraced by UK retailers, seems to add more evidence to this idea.

The problem is that growth that is completely dependent on consumer spending is not sustainable in the long run.  UK consumers can’t keep spending to maintain economic activity, without incurring debts and following the road that partly caused the crisis in the first place.   The Japanese economy has seen this type of growth in the 80’s when consumers would routinely discard their TV sets every year in order to purchase the latest model.

The growth in the UK economy is also combined with falling exports to the eurozone and some measures suggesting business investment is falling too.  Trade has actually caused a negative impact on growth for the last quarter, which suggests that this consumption is partly causing UK imports to rise heavily too.

If the Euro countries where expanding too, then this wouldn’t be too much of a problem, with consumer spending merely providing some impetus.  However as exports fall to the doom laden Euro economies, consumer spending simply won’t be enough.  Much of the UK’s recovery has been based on austerity measures which means that the wages of these consumers haven’t been rising either.

There are some encouraging signs that wages are starting to increase but nothing dramatic.  If the recovery filters into pay cheques then consumer spending might be maintained in 2015.  There are some interesting articles on this situation in the UK economic press and online media, you can access some of these by obtaining a British IP address – here.

There’s not yet a crisis in the UK economic recovery however it desperately needs an improvement in it’s main trading partner’s economies – across the channel.  Until that happens, the recovery and growth may not continue.

Joe Simpson

Writer on technology, entertainment and economics.

Source:http://iplayerusa.org/index.php/proxy-to-access-bbc-iplayer-abroad/