January 2013 in Economics

Image by HM Treasury on Flickr

Now, before I start, I must admit that I am no expert in the field of economics. There are few words and statistics that I understand. But, the relationship between economic policy and return on that policy, in the way of contraction or growth, is not a difficult analysis to undertake. Hence, the recent news items regarding the nation’s return to contraction, the closure of Jessops, the cut of jobs by Honda and the contraction in the construction industry, all within the space of the week, signify a massive problem in our fiscal system.

In an earlier post, I predicted that the return to growth in the third quarter of 2012 was merely the result of the temporary Olympics and Jubilee celebrations (otherwise known as “artificially strong growth”) and this is exactly what has been confirmed by the National Institute of Economic and Social Research (NIESR), noting that without the Olympics the economy would have flat-lined. However, the final quarter of 2012 included the Christmas period – a period of increased and frivolous spending – so it comes as a surprise that we see this contraction so quickly. In another post, I predicted that 2013 would see the UK re-enter a recession. Now this  has not yet happened, (obviously due to the first quarter only having recently begun) but with such a quick contraction and the dent made in the employment figures this week, we can only expect to see this or a dramatic turn of events in the coming months.

Yet, based on just these major newsworthy statistics on job losses, we can already see 2170 people starting their new year without a job, entering an environment where intake of new employees is minimal and those without a job are being punished by the coalition’s blaming policies. Before long, we can see these people losing money on the benefits they did not necessarily used to have to rely on, and then being called scroungers of the state due to their reliance on and complaints about the reformed benefits system via this so-called revolutionary universal tax credit. Ironically, the Government wish to be the helping hand up, but these people will only remember having to take a forceful step down.

But much more ludicrously is the fact that this very week, despite these detrimental austerity measures, despite these massive job losses, despite the number of people’s lives they have ruined, our beloved MPs want a 32% raise in their wage packet. It comes as no surprise, that those who demanded the highest raise were from the already particularly well-off members of the Conservative party. Perhaps more surprisingly is that this raise was demanded by members of parties across the board and not just those of the three main parties.

It is disgusting and awful that those who are coercing the saving of money, reduction of budgets and removal of benefits are those also pleading for more money in their pockets. Because, after all, MPs should be exempt from the rules that they place on the rest of society.

Prime Minister’s Questions – 5th December

Image by Victoria Kettlewell

This week, MPs began Prime Minister’s Question Time by congratulating William on the success of his natural bodily functions, reminding us of the unforgettable, that William and Kate are expecting a baby. Eventually we moved onto the more important topics (one that actually affects our daily lives) of the implementation of the Leveson recommendations, where the PM and the Government were criticised for their apparent and backstabbing refusal to implement statutory requirements for an independent regulation system – a system that would seem intuitive to have to most people. Instead, Cameron says he has trust in the editors that they can establish that themselves and, by that, he means, he doesn’t want to interfere with his close friends and sponsors, only waste our money on an inquiry he won’t adhere to, whilst cutting services that we need, like the NHS. Obviously not enough money was spent on maths in their day, because neither Miliband nor Cameron seemed to agree on any statistics, both quoting different sets form the IMF and the OBR, and telling those opposite them they were constantly wrong. Cameron accused Labour of cutting the NHS and said the Tories were increasing the budget; Miliband accused the Tories of cutting the NHS and said Labour increased the budget. Somebody is right, but only the IMF knows that. PMQs seem to just set the precedent for the later Autumn statement, that outlined that the deficit has been reduced by 25% by deciding not to dish out any money any more.

 

Also posted on Redbrick

A Favourable Backbench Rebellion

Image by Constantin Deaconescu

I’m surprising myself by agreeing with Tory MP for Rochester and Strood, Mark Reckless, whom I have most often found myself contemptuously disagreeing with in the past. Plus, there’s the fact that he’s just a Tory in his day job. Mark is a massive Eurosceptic and somehow manages to argue that every problem we face is in some way Europe’s fault. Yet, yesterday, he stood as a backbencher and voted in favour of a reduction in the funds we provide to Europe. This, I fundamentally agree with in these tough times.

As a country, we are fighting our way through horrific austerity measures and facing devastating and disgusting cuts to our frontline services, yet continue to provide consistent financial support to this international body. Whilst we suffer the effects of cuts, we continue to provide funding to other countries without even beginning to negotiate a slight reduction in respect of our own financial difficulties. This is a preposterous idea. When we are supporting our own citizens less and less each day, why should we continue to support citizens of other countries at the same rate as before?

Now, don’t get me wrong; I do not believe we should wholly withdraw all of our financial support to other countries, but I believe in a proportional cut alongside our other cuts. If something must be cut, it must be cut in line with everything else. We should not favour one thing over another thing, unless with it comes overwhelming benefits.

Hence, I find myself on the side of Labour and a local Tory (although a backbencher, mind you) and agreeing with this successful rebellion on the Government. This is the right step forward; it’s just a shame that this does not create a mandate, and that the Government could still ignore the parliamentary vote when they make their EU funding proposal. Let’s hope they listen to the slight majority and reduce the EU benefit and return some of that saved money to our frightful economy.