Some numbers that tell us something

 

              The last few days have shown us that the Uk economy is generating a good number of private sector jobs. They also reveal that most of these go to a growing workforce, and do not go to those on unemployment benefit. It shows that the welfare reforms and the help with skills and training need to go further and faster to make an impact.

             Inflation at 5.3%  (RPI) is still squeezing real  incomes and living standards hard. It is not surprising that recent shop sales figures are poor. Many people are finding it a struggle to pay for the petrol, the heating and the food after big price increases have gone through. The UK, China and Brazil all have similar inflation rates  – 5.3% (RPI), 5.4% and  6.3% respectively.  The response of the authorities is very different. The UK has an official interest rate of 0.5%, China 6.3% and Brazil 11.75%. In the faster growing countries they want a higher savings rate and fear the impact of rising prices on the public, so they are taking action to curb inflation.

 Meanwhile the UK’s gross contribution to the EU, the amount we have to pay in tax or borrow, has shot up to £19.7 billion last year. Many of us would like to start the public spending cuts with that item.

           On the other side of the world China announced that her foreign exchange reserves now exceed $3 trillion. Such has been her success at making and exporting, at building up a big balance of payments surplus. The good news is that China may now let her currency rise a bit more a bit faster, which will help manufacturers in the over borrowed large importers like the US and Uk to make more at home and export more to China. UK exports of goods are now more to the non EU than the EU, on top of the majority of our trade in services being outside the EU as it has been  for many years.

              The European Central Bank revealed that it is now the proud owner of Euro 77 billion of bonds. It has been active in buying up sovereign debt in the distressed parts of the Euro area to try to help out. With its assistance to Euro area banks as well, it is now highly leveraged with a portfolio of assets that reflect the realities of the current Euro area. It is strengthening its share capital, but from a low base. The new rules on capital and risk that apply to commercial banks do not of course apply to Central banks.

             It is taking a long time to sort out the huge imbalances around the world. China needs to import more and save less. The US, UK, and the weaker parts of Euroland need to export more and borrow less. It is taking a long time to get these countries into a safer relationship one with another.

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44 Comments

  1. Mike Stallard
    Posted April 15, 2011 at 7:17 am | Permalink

    You always seem to put your finger on the pulse! Well written (again!)
    Dan Hannan’s blog tells how the EU is declining in our economy relative to the Anglosphere. This, he says, is because of over regulation. He is too polite to say that there is little or no real accounting either.
    The European Central Bank is laying up a disaster for itself. When Portugal, Spain and/or Greece go belly up, their government bonds will suddenly become pieces of paper. Then all hell will break loose in the Eurozone.
    Another really good reason for leaving the building, I think.

    • alan jutson
      Posted April 15, 2011 at 7:54 am | Permalink

      Mike

      Telegraph (Business Section headlines) this morning outlines the German Finance Ministers concern you write about, that Greece looks like it may need to refinance certainly within the next 5 years, or at least renegotiate soon payment terms and amounts. Next progress report on their situation is this June !

      As you say, we would be beter off out than in, before we get bled dry.

    • Stuart Fairney
      Posted April 15, 2011 at 10:47 am | Permalink

      True enough save for the fact that government bonds and their money are currently just paper, as is all fiat currency. At the risk of sounding drastic, we could see the end of some fiat currencies and given the disasters in small countries like Greece, Ireland and Portugal caused major problems, we can imagine what a Spanish default will cause. If Spain or Italy fail then the Euro will either be destroyed or seriously inflated.

      China grows at 10%, no European country is anywhere near this. Why are our growth aspirations so poor?

      • Edward.
        Posted April 15, 2011 at 9:02 pm | Permalink

        China’s growth figures look good on paper, but it is estimated that the Chinese need between 6+% GDP growth just to ‘stand still’, it has an enormous population and many mouths to feed.

        Also, don’t think that the Chinese economic miracle comes without a cost, there is the absence of any say so for the people and many millions hate their government with a passion.
        The millions of Chinese barely above a subsistence existence, for them – it ain’t all moonlight and roses.
        What scares the living daylights out of the authorities, is that – one day the people will get fed up enough to rise up and remove the rulers of their status and their ‘heads’, when it comes it will not be before time.

        Reply: The comment was just about the economic performance, not about social and political matters.

        • Stuart Fairney
          Posted April 17, 2011 at 9:27 am | Permalink

          “there is the absence of any say so for the people and many millions hate their government with a passion”

          And that differs from the UK how exactly?

          It is true that life for many Chinese still sucks but economic growth is the way out of that one. We by contrast become pooorer due to the absence of real growth and an increased tax burden.

          • Simon
            Posted April 17, 2011 at 11:31 am | Permalink

            China’s leaders have shown themselves to be infinitely more competent than ours .

            Pity we couldn’t bring them over here , bet they could sort this country out within 10 years .

            I don’t agree with the way they apply their one family one child rule but they have got the right idea about bringing their population down to a sustainable level .

            Our politicians on the otherhand are aiming to drive it up past the 70million level (if we are not there already) by immigration .

            As you say , we have absolutely no say about anything which really matters .

            Otherwise we would be having a referendum on PR vs first past the post instead of SAV vs first past the post and would have our say on Europe .

            If by some quirk of AV a party like UKIP got in , I would not trust the votes to be counted/collated/reported properly to reflect that .

  2. lifelogic
    Posted April 15, 2011 at 8:17 am | Permalink

    “Meanwhile the UK’s gross contribution to the EU, the amount we have to pay in tax or borrow, has shot up to £19.7 billion last year.” About £800 per household for nothing but pointless regulations which must cost, at the very least, the same again.

    Cut here now and benefit everyone.

    I see Cameron’s gift of taxpayers money to the Irish is getting even closer to junk status this morning. Can we somehow stop this “generosity” with other’s money please.

    • lifelogic
      Posted April 15, 2011 at 5:18 pm | Permalink

      Meanwhile while he doles out cash to insolvent countries many sound UK businesses are unable to borrow or are being forced to pay back loans they need often to government owned banks – thus hindering any growth or recovery.

  3. JimF
    Posted April 15, 2011 at 8:41 am | Permalink

    It is interesting to look at the conduits for correction of these imbalances. Precious metals, for example, which the Chinese are being encouraged to buy, have moved up in value. So the Westerner selling plus the increase in value to Chinese holders in dollar terms quite quickly makes the Chinese purchaser wealthier than his Western counterpart. It’s the same piece of metal but it is now being held by a Chinese, ready to trade later for his Mercedes, when the price is right.

    • Yudansha
      Posted April 15, 2011 at 10:03 am | Permalink

      The metal in the Mercedes is actually more precious than the precious metal if you know what I mean.

      Unless, of course, they’ve worked out a way of making functional piston rings out of gold.

      A drop in the consumption of imported goods and an increase in private sector employment has to be encouraging.

      However this downturn is lined with silver and presents a great opportunity to take a skythe to bureaucratic empires in the state sector and to clamp down on no-win-no-fee. If these opportunities are missed our recovery will not amount to a hill of beans.

      • azul
        Posted April 16, 2011 at 11:35 am | Permalink

        This guy can’t spell

        • Electro-Kevin
          Posted April 16, 2011 at 9:56 pm | Permalink

          Great. In that case I think I shall apply to Oxford as a mature student.

  4. Andrew B
    Posted April 15, 2011 at 8:59 am | Permalink

    The imbalances will take a long time to settle, you arent kidding, this is a structural change that will impoverish the West (relatively) unless we get better political and economic leadership restoring the need to work, managing borders, and eliminating 80% of welfare. That’s what a private company would do, and that is what our govt should do, except that they wont as they dont have the bottle to tackle the dire situation that the UK is in. And the first thing to do in terms of cutting costs is to slash the EU contribution to zero, otherwise we walk and then next is to cut overseas aid. It is all so simple, why is that so called intelligent people dont get it?

    • Jose
      Posted April 15, 2011 at 11:22 am | Permalink

      They don’t get it because it’s not in their perceived interests as opposed to ours! They refuse to take any interest in the wishes of the people who elect them and are simply perpetuating the same ‘old story’ of looking after numero uno! There are of course a few honourable exceptions including Mr. Redwood but the majority I’m afraid not.
      Cameron appears to want to be seen as the ‘goody’ all of the time, this will lead him nowhere when it comes to election time!

      • Yudansha
        Posted April 15, 2011 at 1:38 pm | Permalink

        I’m sure if Sam and the kids were put into a terrace in suburbia and needed to go to local schools etc whilst the PM ran the country – and that their fortunes and aspirations were at the mercy of him getting this country back on its feet – conditional to the agreement that they were stuck with whatever the outcome was for the rest of their lives and after he’d left office …

        … Mr Cameron’s policies and thinking would be a lot different to what they are now.

        He thinks like he does because he can afford to. Like all lefties.

        He could have had the decency to have been more honest to us about who he really was from the outset.

  5. Javelin
    Posted April 15, 2011 at 9:17 am | Permalink

    With net salaries falling and housing already unaffordable then house prices are doomed to fall for the next 5-8 years. There is no other choice. This will drag the mood of the economy down for nearly a decade. The biggest risk to the economy is a long term psychological one. Interest rates must go up to bring house prices down faster than inflation because it will lead to long term psychological stagnation. House prices are pretty meaningless, they are virtual wealth, except for a few speculators. Psychological optimism is priceless.

    • acorn
      Posted April 15, 2011 at 11:24 am | Permalink

      This is my third attempt at getting past the spam blocker on this site, so you will have to cut and paste the links.

      Javelin. At the risk of this post, or at least the links, dying in the moderation process; have a think on the following.

      According to the attached; “UK house prices at “fair value”, based on rents” . The national accounts reckon that gross rental yields are near norm at 3.57 % . .

      To get to that percentage, you have to include a lot of expensive houses which traditionally have lower rental yields. If you are in the buy-to-let small houses and flats business you will be aiming at 6 % gross annual rental yield. 8.5 % on small commercial property. .

    • Winston Smith
      Posted April 15, 2011 at 12:02 pm | Permalink

      House price capitulation has been predicted for years, but will not happen. Even after the worst and longest recession since the 20s they only dropped 10%. In London, the SE and the SW, they are racing ahead once again; this, despite an unprecedented restriction on loan availability. The nicer parts of the North and the East are following slowly. Why? Supply and demand. Several hundred thousand new migrants arrive on these shores every year. They bring higher birth rates and demand for housing. It starts at the cheap end and filters upwards. Sterling is cheap to the rest of the World, who are buying up huge numbers of housing, especially in London. Londoners move out to the regions in record numbers. Demand for houses in nice areas will continue to outnumber supply, as the associated problems with immigration, such as stretched education and health services, continue unabated.

      • alan jutson
        Posted April 15, 2011 at 2:48 pm | Permalink

        Winston

        Some sense in this view on house prices, given that housing starts have been, and still are, below population increase numbers per year. Only thing likely to hold prices back are an increase in interest rates, or a mass increase in unemployment, or a significant reduction in family incomes, where people then default.

        • Electro-Kevin
          Posted April 16, 2011 at 8:55 am | Permalink

          Alan, add to that a freeze on wage increases.

          A friend of mine is convinced that house prices will double by 2017, in accordance with post war trends. A doubling every ten years.

          A person in London will need to run a mortgage of £1m on an ordinary terrace in just over six years time. £2m ten years after that… £4m after that …

          Utterly convinced of it.

          What of wages then ?

          An MP in the South West complains that he cannot buy his first house despite his £60k salary, “The Goverment must do more to help first time buyers get on the ladder !” is his conclusion (where do they get these people ???)

          The best thing the Government could do – if anything – is to do less. Let the market fall to true levels instead of helping to ramp property beyond the reach of well paid first time buyers.

          Our country is not made wealthier because of these increases. We now have a situation where even an MP on £60k pa can find himself impoverished if he’s not careful. Pity our young when they leave university with £30k debts and a shortage of jobs.

          Change the paradigm. House prices are not indicative of Britain getting richer but of ordinary people getting poorer on a crowded, confused and culturally fragmented island.

          Our children will be renter serfs and slaves and they will be right to utterly hate us for it.

          • Simon
            Posted April 17, 2011 at 11:44 am | Permalink

            When you include the pensions and other benefits of a back bench MP the value of the package is a lot more than £60k/year .

            So he/she is saying that he can’t afford a house on close to £100k/year and he wants other tax payers to subsidise him/her .

            After prices fall , I would like to see ownership of homes below say £2million restricted to British Citizens as happens in countries like the Phillipines .

            What chance our Govt doing anything in the interests of the British people ?

            Conclusion , LibLabCon will continue to be elected and the only logical choice for a British Citizen is to emmigrate .

      • davidb
        Posted April 17, 2011 at 9:36 am | Permalink

        The market is distorted by housing benefit. The new arrivals may include some bringing capital with them or heading for highly paid positions, but most newbies I meet are doing jobs at or near minimum wage. The only pressure they are putting on housing is on the rented sector.

        If mortgages are difficult to get and our population is getting poorer then the driver of house price inflation may well be the landlord subsidy provided by the taxpayers. If that is in fact so then perhaps the limits to housing benefit proposed by the present government lack ambition.

    • JimF
      Posted April 15, 2011 at 7:53 pm | Permalink

      Think about house prices as the new gold standard for Sterling. Interest rates, QE, tax policy are all manipulated to hold to the standard; you might get 20% fewer Euros, or a few more dollars, or a lot less gold or silver for your £ then 3 or 4 years ago, but you’ll get pretty well the same weight of bricks and mortar 🙂

  6. acorn
    Posted April 15, 2011 at 9:32 am | Permalink

    JR; put your Banker’s hat on and put this amateur economist straight.

    The BoE is running a high inflation policy??? Three month treasury bills are at 0.6 %. The BoE balance sheet “base money” implies that it should be about 0.2 %. Being above 0.2 % means that it is allowing “excess liquidity reserves” to leak out into the commercial banks and get multiplied in fractional reserve lending and keep inflation up. The lag in the system means inflation will rise further toward next Christmas.

    Any attempt by the BoE to raise base rate of interest – to curb inflation – would blow those “excess reserves” out of the BoE and into hyperinflation. (Liquidity preference drops as interest rates rise). To stop this, the BoE would have to rapidly shrink its £250 billion balance sheet; 18 % of our GDP ??? The BoE balance sheet is funding various asset purchase schemes which are “swaps” and hence “off balance sheet”. Most of these BoE “other assets” are junk mortgage securities backed by marked to fantasy collateral.

    If the BoE has to start dumping junk and second hand government debt into the market; at the same time as the government is selling its own new debt into the market. Should I buy my new Jag XF now; or, wait till next year? As I see it; it will either be twice the price it is now or they will be giving them away outside Tesco.

    Reply: No, I do not accept either extreme. You are forgetting that the regulator is forcing the banks to hold more capital relative to lending, so the high powered money the Central Bank has released is not available to gear the commercial banks balance sheets. I suspect inflation will be a bit lower next year than this.

    • lifelogic
      Posted April 15, 2011 at 1:09 pm | Permalink

      “the regulator is forcing the banks to hold more capital relative to lending” at the government is pretending to tell them to lend but they know they are not, do to the regulator’s restrictions. As a consequence recovery is faltering and small & medium business cannot create enough jobs for the army of people that the government needs desperately to release to do something useful for a change.

      Natwest/RBS is behaving very badly here despite it being mainly government owned.

  7. Brian Tomkinson
    Posted April 15, 2011 at 10:19 am | Permalink

    Problems galore which will take decades to resolve and even longer if Gordon Brown is made MD of the IMF as is rumoured. With a record like his he couldn’t be trusted to run a corner shop.

    • Johnnydub
      Posted April 15, 2011 at 2:30 pm | Permalink

      The only way Gordon Brown can get the IMF job is if the government nominate him. If that happens I’ll bloody picket no. 10 myself….

    • lifelogic
      Posted April 15, 2011 at 3:02 pm | Permalink

      Gordon Brown in charge of what! I suppose it could be even funnier if he were put in charge of pensions after his destruction of all but state sector ones by his mugging and causing the collapse equities and of company profitability.

      Perhaps he should just retire and write a book – “Destroying the Wealth of Nations” might be a good title.

    • Brigham
      Posted April 15, 2011 at 5:00 pm | Permalink

      I have written to the IMF telling them that the worst Chancellor and the worst PM is rumoured to be their next chief, and saying that I hope they have more sense that to employ such an idiot.

      • StevenL
        Posted April 15, 2011 at 8:16 pm | Permalink

        Can you post a copy of the letter? That’s funny, I might do one on my blog and encourage people to send it in!

      • Stuart Fairney
        Posted April 15, 2011 at 8:42 pm | Permalink

        Who does this CV belong to?

        ~ Boasted about ending boom and bust whilst presiding over the biggest ever
        ~ Inherited a good economy, delivered a disaster
        ~ Destroyed private sector pensions
        ~ Massively increased taxes
        ~ Put country in unprecedented peacetime debt
        ~ Claimed my “golden rule” would balance budget (missed by nearly half a trillion)
        ~ Vastly expanded unproductive state sector whilst destroying wealth creating jobs
        ~ Singly failed to take responsibility for any of this and hid when things got tricky
        ~ Notoriously difficult to work with both for peers and junior staff
        ~ Grumpy, non co-operative and troublesome for notional boss
        (item left out)
        ~ Don’t turn up to current job

        Honestly, would you give such a person any financial job.

  8. oldtimer
    Posted April 15, 2011 at 10:42 am | Permalink

    Your analysis is, as always, very telling. I had not realised that the UK contribution to the EU had risen to as much as £19.7 billion last year. For some reason I do not understand, I thought it was still in single figure billions. How wrong I was.

    There other extremely disturbing aspect of our present predicament is the relative growth rates between the UK, the Eurozone and places like China and India. Last October the IMF was forecasting GDP growth in 2011 of 9.6% for China, 8.4% for India and 1.5% for the Eurozone. Add in the relative debt to GDP %s and the outlook is dire.

    In these circumstances I do not see how the government can justify the billions it is spending directly on Europe, on foreign aid, on foreign military ventures and causing the rest of us to spend, via subsidies, on mindless schemes for useless windfarms and useless extensions to the national grid to connect them up to the existing grid. It makes no sense to me. What cunning plan am I missing here?

  9. Neil Craig
    Posted April 15, 2011 at 11:04 am | Permalink

    “It is taking a long time to sort out the huge imbalances around the world. China needs to import more and save less”

    So long as China is a fast growing economy and we, actively, aren’t such “imbalances” will not get “sorted out”. Assuming increasing wealth is in the Chinese people’s interest I think it unlikely they will sincerely try to hobble themselves to stop themselves further outrunning us. The true answer is for us to stop hobbling ourselves as well. This could easily be done just by government stopping preventing wealth creation.

    David Cameron recently promised a “relentless, forensic” investigation into how he could achieve growth but an FoI investigation has proven that not only has there been no relentless or even easily relenting investigation but that, among the 7 billion man hours of governemnt wotk over the last year not a single one has been fully devoted to determining how to achieve growwth. I can no longer accept that David Cameron is merely out of his depth. He has proven that he does not possess even the most miniscukle trace of personal honesty. His speeches are lies from beginning to end and there are no circumstances whatsoever under which any word or promise he makes can ever be treated as having any relationship with honesty whatsoever.

    • David Price
      Posted April 15, 2011 at 1:21 pm | Permalink

      It isn’t enough to just facilitate growth, we also must stop giving away the knowledge and expertise which take decades to develop, rather than selling the products of applying them.

  10. acorn
    Posted April 15, 2011 at 11:17 am | Permalink

    Javelin. At the risk of this post, or at least the links, dying in the moderation process; have a think on the following.

    According to the attached; “UK house prices at “fair value”, based on rents” . The national accounts reckon that gross rental yields are near norm at 3.57 % . http://www.moneymovesmarkets.com/journal/2011/4/1/uk-house-prices-at-fair-value-based-on-rents.html .

    To get to that percentage, you have to include a lot of expensive houses which traditionally have lower rental yields. If you are in the buy-to-let small houses and flats business you will be aiming at 6 % gross annual rental yield. 8.5 % on small commercial property. http://www.globalpropertyguide.com/real-estate-school/How-to-avoid-buying-into-a-bubble .

  11. Lindsay McDougall
    Posted April 15, 2011 at 12:39 pm | Permalink

    China could do us all a favour, itself included, by floating its currency and giving its workers a better deal. It should also invest its state surplus in currencies and countries that give it the best rates of return, as opposed to propping up America’s overspending.

    We are beginning to wobble a bit on reducing spending. We could have vetoed the EU budget increase but we didn’t. We have ring fenced the NHS and foreign aid expenditure. We are finding it difficult to contain NHS expenditure and we are shaping up to slow down the NHS reforms because of militant resistance from hospital employees – that will cost us. Our military expenditure in Libya is currently coming out of the contingency reserve; that can’t carry on indefinitely. We have helped the bailouts of three Eurozone countries that are quite likely to default. We have implemented a reform of University Education that will eventually lead to reduced State expenditure but not in the short term. We have financed a state visit by the Pope when there was no need to carry on recognising the vatican state. We carry on being over generous to Scotland via the Barnett formula. It all adds up.

    The response of the Bank of England to 5.3% inflation is ludicrous. People who get an interest rate of only 0.5% are losing out to the tune of 4.8% per annum. Base rate should be raised to 3% PDQ and held at that level for several months while we plan for the long term. That should involve targetting an inflation measure that excludes VAT and excise duty but includes an allowance for house and other asset prices and progressively reducing the target by 0.5% per annum until it is zero.

  12. forthurst
    Posted April 15, 2011 at 2:13 pm | Permalink

    “On the other side of the world China announced that her foreign exchange reserves now exceed $3 trillion.” When the Chinese read Matt Taibbi’s piece in Rolling Stone, “The Real Housewifes of Wall Street”, a commentary on what, when the Federal Reserve private secret Bank has been induced by Congress to lift up her skirts a little, the more pruriently minded of us will have been imagining for some time, was revealed, a pornographically rebarbative vision of sleazy depravity, they will no doubt be considering the precise nature of the collateral underpinnings of their investments.

    If the Americ’a Central bank exists to facilitate the transfer of wealth from the deserving poor to the undeserving rich, Europe’s Central bank exists to transfer wealth from the rich to the undeserving poor. In America, the fiat currency is to facilitate the pillaging of the country by Wall Street; in Europe it is to be used as a glue to hold together what inevitable economic forces are driving apart.

    No wonder that China and others are looking to establish other denominations in which to transact their business. When Central banks issue fiat currencies to any other purpose than to facilitate transactions and trade in a stable store of value, such as propping up house prices, or furthering the cause of World government, or simply as a pyramid scheme for the ultra rich, they lose their credibility to the detriment of a stable world economic environment with fair rewards for honest endeavour and penalties for dishonesty and sloth.

  13. Kenneth
    Posted April 15, 2011 at 3:00 pm | Permalink

    Who knows, in 50 years Greece, Portugal, Ireland and perhaps even the UK may be colonies of China.

    Payments to the eu quango are indeed disgusting.

    I want a return to democracy!

    • James Matthews
      Posted April 15, 2011 at 5:25 pm | Permalink

      They won’t need to colonise us. On present trends they will own anything here worth owning in less than fifty years and will be able to control us as effectively and ruthlessly as the Americans did at the time of suez.

  14. Gary
    Posted April 15, 2011 at 6:27 pm | Permalink

    supply shortage in houses is the old chimera trotted out, usually by the heavily mortgaged, to convince themselves that property value only goes up. Despite having acute property shortages in Hong Kong and Japan, this did not stop them having up to 90% plummets in property value within the last decade. What really drives house prices is the demand and supply of credit supply , and we have an acute shortage if both of the latter. At total debt of 466% of gdp and growth somewhere far south of the 2.6% required just to break even, we may push on a string for years to come. This in turn makes the derivative mountain piled onto of property values decidedly shaky, an ongoing threat to the banks and hence the sovereigns. Instead of berating China for saving, we should wish that we had saved while we still had the chance.

  15. BobE
    Posted April 15, 2011 at 8:42 pm | Permalink

    Nobody reads this and nobody cares. We are wasting our typing fingers.

  16. Kenneth
    Posted April 16, 2011 at 2:55 pm | Permalink

    Let’s not give up.

    There are a hard core of, say 50 MPs who are thinking the same way as John Redwood plus an outer group who are sympathetic and will occasionally lend their support.

    Every time the eu quango or a foreign court interferes these groups gain some recruits.

  17. Bazman
    Posted April 16, 2011 at 6:39 pm | Permalink

    The private sector is not going to replace the half million jobs lost by government cuts. All the people who are for these cuts need to say whether they are personally effected by these cuts and what they propose the people who are put out of work are supposed to do. Apart from claiming benefits that is. Are they meant to just take it? Get a trade? Go to university? Get a minimum wage job? Where? Competition is intense especially for this type of work. Maybe some of the fantasists could tell us and tell us what they do for a living?

    • Simon
      Posted April 17, 2011 at 1:55 pm | Permalink

      Very few people will be made redundant from a public sector which has become fat and bloated .

      A large proportion of those which are will be close to retirement and have good pensions and good payoffs .

      The ones who will be hit hardest are the young who planned on getting a job as civil servants .

      Every unneccessary job created in the public sector – and they do exist – causes the loss of several jobs in the private sector which is taxed to pay for it so it makes numerical sense to get wrid of all the unneccessary ones doesn’t it ?

      I hate it that large multinationals do not play fair when it comes to tax and believe that if the political will existed we would be able to recover more of it . Fact is it doesn’t and it’s much easier to just raise taxes of the little man .

      If you are not in favour of cuts , what are you proposing instead , borrowing yet more money to keep the expenditure going ?

      Or have you found another way of paying for it ?

      As a country should we just accept that public spending will always rises faster than our ability to pay for it ?

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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