The rush to the shops

The retail sales figures were better this month. They confirm the feeling that the UK economy is now recovering at a faster pace. The forward indicators suggest we will experience reasonable growth again in the third quarter of 2013, with the service sector looking good.

It is true that many household budgets are squeezed. Labour wish to highlight this, but they should remember the worst of the squeeze occurred in  2008 and at the end of their period in government. Since then wage growth has been very subdued, whilst price rises have still been of concern.

It looks as if there will now be more confidence. Consumers have more confidence to buy things, probably because there is now less fear of losing your employment. Companies have more confidence, leading them to invest more and spend more on marketing and training. Homebuyers will have more confidence to buy a first home or trade up.

The industrial revival we also need still requires policies that promote cheaper energy. The recovery will be easier if more is done to mend the banks and to permit them to lend sensible extra amounts of money.

Mr Carney the new Governor of the Bank of England  today needs to be careful. Issuing forward guidance is difficult, as it has to be credible and adaptable to changing conditions. He needs to avoid offering any nuanced or complex guidance which makes some people think low short term interest rates could end sooner rather than later, if he is to succeed with his aim of encouraging more spending and investment by reassuring spenders and borrowers that rates will stay down.

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152 Comments

  1. Brian Taylor
    Posted August 7, 2013 at 5:20 am | Permalink

    Cheaper Energy, how can this be achieved with the policies that are in place.
    A carbon tax on fossil fuels that is set to increase in future years.
    Closing coal fired power stations,when coal has never been cheaper.
    Switching Drax to burn wood chip,which we will have to import.
    What do you think about STOR,short term operating reserve,Which is paying a fortune to have Diesel Generators on standby when the wind don’t blow? See Booker And North.
    Scrap theClimate Change Act,and all the target,and stop rigging the market that try to make renewables look competitive !

    • Hope
      Posted August 7, 2013 at 9:25 am | Permalink

      Well said. Cannot recommend enough.

    • Leslie Singleton
      Posted August 7, 2013 at 10:01 am | Permalink

      Brian–Why don’t we see more – much much more – about tidal, marine turbine and wave power? And if it has to be on land, personally I ‘d prefer an oil derrick, fracking or otherwise, nearby to a wind turbine, if only because the latter are (at a wild guess) ten times higher, not to mention noisier, than the former.

      • Mark
        Posted August 7, 2013 at 3:04 pm | Permalink

        The reason is it is uneconomic. The recent Energy Bill guarantees a price of over £300/MWh for tidal and wave power schemes – that’s more than SIX times the average price of wholesale electricity last year. I’d rather not be paying such subsidies.

        • lifelogic
          Posted August 7, 2013 at 3:55 pm | Permalink

          Indeed bonkers, bonkers, bonkers as Boris might say. Also the biomass nonsense for the ex-coal stations and the PV nonsense. And gas is getting very considerably cheaper in the US, due to fracking and all for what, a barmy, discredited religion.

          Fine but let them pay for their own religions do not force us to.

          • uanime5
            Posted August 8, 2013 at 3:34 pm | Permalink

            The only discredited religion is the one that claims we can constantly increase CO2 levels without suffering any adverse consequences.

          • lifelogic
            Posted August 9, 2013 at 12:46 pm | Permalink

            @uanime5

            Well that is what has clearly happened so far. No recent warming for 15 years, despite the co2 output and no increases in dangerous weather events (outside the normal range) for the last hundred years that c02 concentrations have increased.

            It is you who has caught the BBC religion, when will we get some real & sound science to back it all up?

          • Bazman
            Posted August 10, 2013 at 3:10 pm | Permalink

            A problem that you still have not answers is the world needs for clean and efficient energy is that bonkers. How will this future need be met if no research or money is invested in clean and efficient energy? The pollution in China for example needs to be addressed and who will they look to for this technology? Western companies. The market is massive and if we followed your and other right wing bonkers regressive thinking we will be left behind and buying this technology of some other country. London is a very dirt city because of emissions is it bonkers to try to reduce this dirt? More reliable efficient and recyclable household goods and cars. Is that also bonkers? Get back to us bonkers with your less than bonkers response. No doubt you would be singing the virtues of the horse over the car or the candle over the light bulb a 100 years ago and telling us they are both bonkers…
            The world need clean and efficient energy and you are bonkers if you do not believe this, but no doubt you will still be ranting on how it is bonkers.

        • Leslie Singleton
          Posted August 7, 2013 at 6:29 pm | Permalink

          Mark–Given that you mention the Government, its wretched Energy Bill and its even more wretched subsidies I am sure you are right. Personally I find it impossible to believe that all that power ever so reliably sloshing in and out of estuaries twice a day every day cannot be harnessed economically. Not trying to nitpick but I notice you do not mention marine turbines–how can it be possible for them not to work economically? Are they included in this here Energy Bill?

    • lifelogic
      Posted August 7, 2013 at 10:21 am | Permalink

      Indeed and stop now the hugely biased BBC reporting on this issue that makes this huge fraud against tax payers possible, in public opinion terms. In particular the decision by the BBC to abandon impartiality after a meeting with 28 “experts” years ago, who turned out to be no such thing, when the list was finally discovered despite the refusal of the BBC to publish them.

      A bias they still exhibit, almost every day in a drip, drip feed of endless nonsense propaganda. Yet the usually arty reporters, sometimes do not even understand what units energy is measured in, nor what positive feedback actually is, in short they have not got a clue.

      • Bazman
        Posted August 10, 2013 at 3:21 pm | Permalink

        Your endless and mindless propaganda with no idea on most subjects with little intellectual understanding is not noticed by yourself? You have in past posts showed little understanding of KW/h or the problem of the lifecycle of white goods. Ranting is not understanding you need to have some facts that can be backed up by argument. You do not reply when faced with any. What does this tell us? Here’s one. White goods. Throwaway or longevity? Which is best? You will pay either way. Answer that one.

        • Bazman
          Posted August 10, 2013 at 10:24 pm | Permalink

          Lifelogic. You will need to tell us. Throwaway or Longevity? We are sick of your ranting and claims of intellectual abilities. It is BBC propaganda.

    • uanime5
      Posted August 7, 2013 at 12:39 pm | Permalink

      Coal is cheap because there’s a reduced demand for coal. For example let’s suppose there’s two coal mines where Mine A spend $30 dollars per short ton and extracts 1 million short tons of coal per year and Mine B spend $50 dollars per short ton and extracts 5 million short tons per year. If both can sell coal for $60 dollars per short ton then they both make a profit. However if demand falls below 1 million short tons and the price of coal drops to $40 dollars per short ton then Mine B will go bankrupt, while Mine A will have to sell coal at a reduced price.

      So if the UK makes a dash for coal it will cause the prices to rise again.

      • Jerry
        Posted August 7, 2013 at 1:21 pm | Permalink

        U5: “Coal is cheap because there’s a reduced demand for coal.

        Then all the more reason to use it – again. Hence why Germany is again burning coal as if it’s gone out of fashion and the Chinese has never stopped.

        “So if the UK makes a dash for coal it will cause the prices to rise again.

        In relation to what, the price of oil, wind turbines or cornflakes?…

        • uanime5
          Posted August 8, 2013 at 3:41 pm | Permalink

          Firstly the more coal is in demand the more the price of coal will rise. As I explained in my example the price of coal is based on how much is needed and what it costs to get the most expensive coal. So the UK cannot purchase millions of short tons of coal without having an impact on the price.

          Secondly Germany and China both mine their own coal so they can keep costs low; something that can’t easily be done in the UK due to many of the mines being flooded to permanently close them. So if the UK wants to use coal we will have to import it and pay far larger transportation costs than Germany or China.

          • Jerry
            Posted August 8, 2013 at 6:44 pm | Permalink

            @U5: “the UK cannot purchase millions of short tons of coal without having an impact on the price.

            Of course we can, if no one else wants the product it actually makes it a buyers market! There is plenty of open-cast coal mining in the world, and who is saying that deep coal in the UK can’t be extracted, not miners, their unions nor mining engineers…

      • Edward2
        Posted August 7, 2013 at 1:30 pm | Permalink

        Uni
        You assume no increase in supply to satisfy the increased demand in your unlikely scenario.

        • uanime5
          Posted August 8, 2013 at 3:43 pm | Permalink

          In my scenario the only way to increase supply is to extract the more expensive coal, thus pushing up the price of coal from all suppliers (why would a supplier charge $40 when they can charge $60).

          • Jerry
            Posted August 8, 2013 at 6:47 pm | Permalink

            @U5: “why would a supplier charge $40 when they can charge $60

            Because they can’t get $60, you seem to have forgotten that coal is out of fashion, and unless the UN/EU change their stance on AGW it will remain so…

          • Edward2
            Posted August 8, 2013 at 6:51 pm | Permalink

            Uni
            Your scenario is a fantasy of the real world market for coal.

      • lifelogic
        Posted August 7, 2013 at 1:52 pm | Permalink

        Well slightly, perhaps but still far cheaper than wind, pv, biomass and all the other nonsense.

        • Bazman
          Posted August 10, 2013 at 3:29 pm | Permalink

          It is not nonsense. The crux of the problem is that it is not efficient or green if you like. At the moment that is, but neither is nuclear and you have no problem with massive public subsidies on that for some reason? Maybe Fossil fuels will become green, but thats is not you argument. Your argument is as cheap as possible and to hell with the consequences as we will just deal with them if there are any and we will pretend there is none if there is. A right wing religious fatalistic point of view spouted by many a religious fundamentalist on many subjects. All is pre written in it’s most extreme form.

      • libertarian
        Posted August 7, 2013 at 5:13 pm | Permalink

        Uanime5

        Dont ever go into business. Stick to socialism you dont have to worry about numbers with that you just borrow everything from someone else.

        You a) fail to account for the rise in demand b) the demand making redundant mines/alternate mining methods viable again . c) You don’t state why the price will be higher than the alternatives d) you overlook that renewables are tax payer subsidised and if you believe thats needed then you could do the same with coal

        • uanime5
          Posted August 8, 2013 at 3:52 pm | Permalink

          Unlike you I do understand how the market works. Specifically that if you only need 1 million short tonnes of coal no one will pay $50 dollars to extract if from Mine B when they can pay $30 dollars to extract the same amount from Mine A.

          A) The result of the rise in demand is that the mines where it’s more expensive to mine coal are used to increase the amount of coal produced. This results in the price of coal increasing from all suppliers (why would a supplier charge $40 when they can charge $60).

          B) Mine B is an example of this. It was redundant because it was more expensive to extract coal from this mine than mine A.

          C) That’s because it’s irrelevant to my example, which explains why coal prices are controlled by demand.

          D) I didn’t mention renewables because it wasn’t relevant to my example. You’ve also ignored all the subsidies that coal and oil get (mainly in the form of tax breaks).

          In conclusions your main error was to assume that because Mine A could produce coal for $40 per short ton that every other mine would also be able to do this. In reality there’s a huge variation between the cost of extracting coal from various mines and companies will always mine as much coal as possible in whichever mine it’s cheapest to mine coal.

          • Edward2
            Posted August 9, 2013 at 3:09 pm | Permalink

            Are you claiming Uni your very specific fantasy scenario has some relevance to the actual world market for coal?

          • Bazman
            Posted August 10, 2013 at 3:31 pm | Permalink

            How do these third world countries produce coal so cheaply?

  2. alan jutson
    Posted August 7, 2013 at 5:37 am | Permalink

    John

    I agree we seem to have stopped the rot, but we are still as a Country getting further and further in Debt.

    A long, long way to go yet.

    • Hope
      Posted August 7, 2013 at 9:31 am | Permalink

      Stopped the rot. I normally agree with you, but this is way past reality. What have the coalition done that Labour would not? Budget way off course and cannot be brought back in line as promised by Osborne. Timid welfare reforms where it still does not pay to work. EU continues to rule our lives and Cameron is ever eager to champion this state of affairs. Borrow and give away money that we taxpayers have to pay for. 299tax rises and increasing. How about introducing gay marriage without a mandate. Ring fence a failing disgraceful World Health Service. Energy policy that is economic madness. No, the rot is there and is being added to by a social democrat Cameron.

    • Leslie Singleton
      Posted August 7, 2013 at 10:02 am | Permalink

      Alan–We will only have stopped the rot when the annual deficit turns in to surplus

      • alan jutson
        Posted August 8, 2013 at 8:16 am | Permalink

        Leslie

        I Agree with you, that is why I said we still have a long, long way to go.

        We are very, very slowly turing in the right direction by lowering what was the increasing addictive rate of borrowing.

        Eventually we will I am sure get into the surplus that we all require.
        Not fast enough I would certainly agree, but at least we are not escalating the spending year on year, so the actual cause of the rot (perhaps I used the wrong word here) has stopped.

        I would more than happily agree so much more has to be done before we move financially forwards, and like many here I would have preferred rather more control on spending and waste at the outset, so that we tackled our problems earlier and with rather more gusto.

  3. Mike Stallard
    Posted August 7, 2013 at 5:59 am | Permalink

    Down here we are coming to terms with our poverty. Clothes from charity shops. Food which is on special offer. Bus pass whenever possible. Sharing lifts. Cup of coffee in restaurant or a bargain lunch is a real luxury. We get by very well, in fact, in this wasteful society.

    There is – round here – sufficient work in factories and schools are improving.

    Meanwhile we watch the bureaucrats discussing stuff and getting us further and further into debt. We are preparing, too, for the lights to go out, probably sometime in the next couple of years.

    I am sure that all this is a real puzzle to economists.

  4. Gary
    Posted August 7, 2013 at 6:12 am | Permalink

    At what cost this so-called recovery ?

    In this house flipping economy, as long as house prices rise, people draw cash against their home equity and blow it on trips and trinkets. The govt has borrowed another £130billion from us to make house prices rise. The govt debt keeps rising. The left hand takes and the right hand gives in a comical sleight of hand that they call Gdp growth. John Law must be smiling from the grave.

    If they have discovered the perpetual motion machine we are saved, if not we are doomed.

  5. margaret brandreth-j
    Posted August 7, 2013 at 6:13 am | Permalink

    It is good to hear a little optimism.

  6. Nick
    Posted August 7, 2013 at 6:14 am | Permalink

    Or there is a far simpler explanation.

    1. You’re deliberately causing inflation
    2. Wages are fixed .

    The rationale behavior is to spend now, because you get more.

  7. Nina Andreeva
    Posted August 7, 2013 at 6:32 am | Permalink

    JR you really want us to believe there is some sort of recovery on at the minute? Where is the beef? The Economist on July 6th noted that the UK is 159th best at investing in its industries behind Mali, El Salvador and Paraguay. That is a sure sign that employers know there is no serious demand there yet. Has anybody with a son/daughter graduating this summer got a proper job yet that justifies the debt that came with getting the degree? Or if you have lost your job have you walked into another that comes with equal or even better wages?

    Here are a few facts and figs for you to challenge if things are so rosy and the UK has hit “escape velocity”. As Liam Halligan points out in the DT, while other leading Western nations like Germany and the US have more than recovered the GDP losses sustained in 2007/8 the British economy is still 3.3pc smaller than before the crash. Real wages continue to shrink as inflation, which has been above the Bank of England’s 2pc target for more than three and a half years now continues erode purchasing power. British GDP per head is actually some 7pc below its 2007 peak. Despite the pound falling some 20pc against our main trading partners in recent years, UK exports have slumped. Last year, UK exports were worth £310bn compared to £420bn of imports, landing us with an absolutely massive trade deficit, second only to America in absolute terms.

    I know things are on the mend when the printing stops and interest rates go up but you know you cannot do that because you know what will happen next ….

  8. Roger Farmer
    Posted August 7, 2013 at 6:41 am | Permalink

    I do not wish to rain on your parade. I would like to see the split between the centre town shops and the supermarkets and other out of town shopping centres. Town centres seem to be dominated by charity shops, coffee shops, estate agents, and many too many boarded up retail premises. A recovery if any seems to be off piste.
    It is the death of town centre shopping that needs to be addressed before coming to any conclusions as to the buoyancy of the economy and possible inferences that this could lead to some sort of tory revival. There are too many other factors, usually self inflicted,
    that indicate that the tories have a long way to go particularly where credibility is concerned.

  9. Jerry
    Posted August 7, 2013 at 7:08 am | Permalink

    Another “Lets bash Labour” opinion piece, of course the economy will have been bad right after the banks crashed and the taxpayer had to bail them out -to prevent a 1920s style crash- but are you seriously saying that (after, and here you are wrong, the economy had started to pick up again in the year or so before the 2010 election [1]) the best that the Tories have been able to achieve is a flat lining economy?!

    My theory, as to why retail figures are better, from living in the real world and not the political bubble that is Westminster, people simply can’t put off for ever buying non immediate essentials for ever, eventually cloths don’t fit or wear out, the washing machine or fridge fails etc. Also, regarding these retail figures, what was the split in the payment methods, a sign of spare money is a cash-sale, but how many have used credit that they then plan on rolling over by paying off one card with another, have many have taken out some other sort of credit loan, an authorised overdraft or worse – unless we know the details the figures are mere statistics along with the usual rider about such statistics.

    John you headline your website “Incisive and topical campaigns and commentary on today’s issues and tomorrow’s problems”, sorry to say but more recently your website might well have topical campaigns and commentary on today’s issues and tomorrow’s problems but it is not very “incisive”, just pure party political – there must be an election in the offering…

    [1] according to the Oxford Review of Economic Policy as published in the Oxford Journals

    Reply It is not party political – I report when the economny is doing badly and why, and now need to report the economy is doing better and why.

    • Jerry
      Posted August 7, 2013 at 8:01 am | Permalink

      My original comment was, obviously, in response to the original version that was published (before 7:30am), although the current version is a more measured piece my fundamental comments still apply.

      Reply I added a bit on Mr Carney but did not change the rest

    • Jerry
      Posted August 7, 2013 at 8:46 am | Permalink

      @JR Reply: “It is not party political

      Well that is a mater of opinion of course, many will see my own comments as such too, but to rip into Labour by stating the obvious that the worst of the squeeze occurred in 2008 (at the time of the international banking crisis) serves no purpose other than to be party political rather than analytical – whilst as I suggested, the often used figures for the immediate pre-election period have been questioned by academics.

      Reply If you want to see me rip into Labour you need to go elsewhere and will see and hear something very political and different. It is a matter of fact that living standards fell very sharply during the Credit Crunch which was on Labour’s watch.

      • Nina Andreeva
        Posted August 7, 2013 at 9:01 am | Permalink

        Jerry you cannot seriously be considering voting Labour are you? What with will all that social inequality at levels way beyond what Mrs Thatcher ever achieved? Check the UK’s gini coefficient over any time period you fancy to see how unequally earnings were distributed. Keir Hardie must be spinning in his grave with all those lies over the illegal war in Iraq . Let alone all those MPs ending up in jail. Face up to it Labour is not a moral crusade anymore …

        Anyway nice to see you are still commenting and that you have not been put off by JRs inscrutable moderation policy!

        • uanime5
          Posted August 7, 2013 at 12:53 pm | Permalink

          I have checked the gini coefficient. Between 1979 and 1993 it rose from 26 to 37. It remained at about 37 between 1993 and 2005, then increased to 40 in 2009. So it’s clear which political party was responsible for the greatest increase in the gini coefficient.

          http://www.poverty.org.uk/09/index.shtml

          Given that Labour introduced minimum wage and several other reforms to benefit ordinary workers, rather than employers, I’d have to say that they helped reduce social inequality for most people.

          Reply Your own figures show they presided over a new high for inequality as measured by Gini

          • frank salmon
            Posted August 7, 2013 at 4:21 pm | Permalink

            ‘The proportion of total income going to the richest tenth is noticeably higher than a decade ago: 31% in 2008/09 compared with 28% in 1998/99. The rest of the income distribution changed little over the last decade.’
            This from http://www.poverty.org.uk/09/index.shtml

          • uanime5
            Posted August 8, 2013 at 4:25 pm | Permalink

            John you do realise that if the 2010-2012 figures show an increase in the Gini coefficient then by your logic the Conservatives and Lib Dems have presided over a new high for inequality.

          • Lindsay McDougall
            Posted August 8, 2013 at 8:51 pm | Permalink

            Hang on guys. Many director salaries and bankers’ bonuses have come crashing down since 2009. I wouldn’t be a bit surprised if the GINI index for UK was now lower. I think that this is one of the many time series statistics that the World Bank publishes in its data, and there may now be data to the end of 2011.

        • Jerry
          Posted August 7, 2013 at 1:45 pm | Permalink

          @Nina Andreeva: To be honest, I have no idea who I will vote for, in the UK we now either have shallow political parties who all try and occupy the same postage stamp of policies or are so far on the political fringe that one needs a telescope to see them!

          Between 1945 and 1979 the country had a choices, since then and most certainly in 2010 (and again in 2015 I expect) the country will simply have options on a theme – even UKIP are not actually offering anything radical beyond leaving the EU, as if that will be the magic bullet.

        • Bazman
          Posted August 10, 2013 at 3:33 pm | Permalink

          The idea that the Tory party will do anything about inequality is laughable as this is what they believe is fundamentally right and the engine of growth.

          • Edward2
            Posted August 10, 2013 at 8:24 pm | Permalink

            Inequality grew most under the last Labour Government.

      • Richard1
        Posted August 7, 2013 at 9:56 am | Permalink

        Jerry is promulgating the Labour line that the banking crash just wafted over from America like Avian flu and had nothing to do with them. It was Labour’s big debt, useless regulation and loose money policies which caused the banking crash in the UK – and no the taxpayer did not ‘have to bail out’ the banks by subscribing to shares in the way Brown did. They should have been restructured under BoE administration without cost to the taxpayer.

        Leftists may deny it but the strong evidence, which voters realise, is Labour governments are an economic and financial disaster.

        • uanime5
          Posted August 7, 2013 at 12:58 pm | Permalink

          The problem was due to the US banks because they turned worthless mortgages into secure assets, then sold these assets all over the world. When people defaulted on their mortgages these assets became worthless and banks all over the world lost billions.

          Unless all these banks had enough money to guarantee customer deposits, something they weren’t required to have under law, it would be impossible to restructure them without cost to to the tax payer without savers taking 100% haircut on their savings.

          Finally given that most Conservatives were demanding even less regulation, which would have made the crash much worse, it’s grossly misleading to blame this entirely on Labour when the Conservatives would have done the same thing if in power.

          Reply Conseravtives, myself included, demanded less regulation, but also demanded stronger and more effective regulation of cash and capital, and highlighted the excesses of the banks’ balance sheets under Labour.

          • frank salmon
            Posted August 7, 2013 at 4:23 pm | Permalink

            Also, which is worse, to be out of power and wrong – or IN power and very WRONG?

          • Jerry
            Posted August 7, 2013 at 5:30 pm | Permalink

            @JR reply: Before the mid 1980s we had effective regulation, guess which party decided that effective regulation got in the way -such as the simple act of having to talk to another human, which could be an effective form of regulation without anything more, thus centuries of market regulation and working practises were swept aside…

          • Richard1
            Posted August 7, 2013 at 6:14 pm | Permalink

            You are quite wrong, it would have been perfectly possible to recap the banks at the expense of the shareholders and creditors without recourse to taxpayers as argued at the time by John Redwood, as repeatedly explained on this site, and as is now increasingly accepted around the world as the right policy in such circs. You are also wrong to blame the whole crash on American banks repackaging mortgages (though that was part of the reason, and mortgages are one of the socialist / state controlled parts of the US economy, so of course they were a disaster waiting to happen). The first UK bank to go bust was Northern Rock, before Lehman, and nothing to do with either the USA or investment banking.

          • Lindsay McDougall
            Posted August 8, 2013 at 3:32 pm | Permalink

            Neither the US banks nor the Conservatives were responsible for omitting house prices from the UK inflation index that was targeted. Mervyn King knew that he that he was doing wrong by not including house prices because he kept talking about it – but he didn’t resign. Resignation was the only thing that would have caused Gordon Brown to end his catastrophic complacency.

          • uanime5
            Posted August 8, 2013 at 4:33 pm | Permalink

            @Richard1

            What was the ratio between the amount shareholders and creditors would lose compared to RBS’ debts? If this wouldn’t have covered RBS’ debts then it won’t work. Also would people who had accounts at RBS lose their money and what effect would it have on the economy if RBS’ creditors had to write off their losses?

            The problems with mortgages in the USA was due to banks trying to turn bad mortgage based assets into good ones to make more money. So the cause of this problem wasn’t socialism but capitalism.

            Regarding Northern Rock they went bankrupt because their main revenue generator was turning 120% mortgages into asset based securities. When the Americans started defaulting on their mortgages the demand for asset based securities disappeared and North Rock lost their main revenue stream. So the problems in the USA did effect them.

        • Jerry
          Posted August 7, 2013 at 1:36 pm | Permalink

          @Ricghard1: I most certainly am not promoting the line that the banking crash just wafted over from America like Avian flu and had nothing to do with them (who ever “them” is).

          Many could see the inevitable coming years ago, long before the Blair-Brown years, it was just that with Brown the boom years took a little longer to turn to bust than before. You only get a banking crisis built on excessive credit if there is excessive credit and the credit boom started way before Blair-Brown even considered that either of them could run for the leadership of the Labour Party – that means long before the early 1990s…

          • frank salmon
            Posted August 7, 2013 at 4:25 pm | Permalink

            Rubbish. Government debt was falling up to 1997 and fell further when Labour kept to tory spending plans. Then they increased borrowing and relaxed banking regulation with a resulting boom based only on borrowing. They caused the crash – not Thatcher.

          • Jerry
            Posted August 7, 2013 at 5:39 pm | Permalink

            @frank salmon: The 2008 crash was not built on government debt – as such – it was built upon the domestic mortgage plus domestic and business credit. The economic crisis since has been built upon the government debt caused from bailing out the banks etc. in 2008…

            Oh and as has been pointed out, Labour did not cause the USA banking crash, and it was that crash that rattled its way around the world taking in many other countries than just the UK. Also, how many housing market bubbles burst were there between 1980 and 1997, I seem to recall about three, how many between 1997 and 2008 (when the banking crisis hit)?

            Reply The large build up in government debt was not to bail out banks but to -pay for excess spending.Northern Rock, RBs etc were banking crises made in the UK and presided over by the UK Treasury, bank and FSA.

      • margaret brandreth-j
        Posted August 7, 2013 at 10:16 am | Permalink

        John I want to see your rip into labour, not that I would automatically agree , but
        what I see of you is so gentleman like and slightly objective.

        Reply This is not the place for me to rip into Labour. I am trying to provide sensible commentary, not a political campaign.

        • margaret brandreth-j
          Posted August 7, 2013 at 5:08 pm | Permalink

          I didn’t express myself clearly. I will clarify. In what arena do you rip into labour? In the house or in Wokingham?
          Another question. .don’t the continual arguments and back biting upset you a little?

          Reply: If I am on a political platofrm and Labour is the opponent then I would criticise Labour. No, I do not do so much in Wokingham as Labour is not my main opponent there. Labour has no members on the Council. I do prefer to be positive and explain what I want to do , and what the party I represent is offering by way of improvement.

        • JimF
          Posted August 7, 2013 at 6:00 pm | Permalink

          Yes, but we would like to see you rip into Labour. It is still within the bounds of sensible commentary to say that the UK should balance the books, low interest rates won’t lead to lower unemployment but decreased employment regulation will. A sensible energy policy would help all.
          Your problem is you’d also be ripping into the Conservatives by saying this.

          • Jerry
            Posted August 8, 2013 at 8:36 am | Permalink

            @JimF: “low interest rates won’t lead to lower unemployment but decreased employment regulation will.

            Oh right, so being able to invest more cheaply in a (new start-ups or existing) companies will not reduce unemployment but being able to fire employees more easily will – yeah, that figures, if one lives on Mars I suppose…

  10. Iain Gill
    Posted August 7, 2013 at 7:11 am | Permalink

    Bubbles bubbles everywhere

    Just keep borrowing or spending your savings

    Just keep printing the money

    Its bound to end in success

  11. Brian Tomkinson
    Posted August 7, 2013 at 7:34 am | Permalink

    Spending is increasing and savings are reducing. How can this be sustainable? Higher wages are being advocated and this will stoke inflation – no doubt Osborne would like to inflate away the debt as he has no idea of how to stop increasing it never mind reducing it. Funny how we never hear anything much about the government deficit these days. Just for your information the debt is now £1,204 billion and still rising.

  12. lifelogic
    Posted August 7, 2013 at 7:47 am | Permalink

    As you say:- The industrial revival we also need still requires policies that promote cheaper energy. The recovery will be easier if more is done to mend the banks and to permit them to lend sensible extra amounts of money.

    Indeed the banks are still in a huge mess and charging huge margins and fees so interest rates to borrowers are far from low in reality.

    We also need far less tax and far less government, more like 20% of GDP than nearly 50%. We could also do without the hugely damaging, counterproductive, General Anti-Abuse Rule (GAAR) that just came into force. The law it seems is now what ever HMRC decide it is at the time. It will damage business and the UK as a place for business hugely, it is totally misguided like so much of what this dreadful government does. It will create more parasitic jobs all round too.

    Why does Carney need to issue forward guidance, surely the long term interest rate markets do that anyway. Would you trust a forecast with someone with a partly political agenda anyway? I prefer the markets, which incidentally, give the Tories just a 20% chance of an overall majority. It could have been so different had Cameron not given away the election 2015 election with his lefty, big state, pro EU, fake green agenda.

    • zorro
      Posted August 7, 2013 at 10:20 am | Permalink

      I see that Carney’s long term positioning is that ‘interest rates to stay at 0.5% subject to inflation remaining under control’…….Well, that depends what he means when he says ‘inflation remaining under control’…..As the Eurozone becomes less interesting, the UK gets riper for he picking…’under control’ indeed!

      zorro

      • lifelogic
        Posted August 7, 2013 at 1:59 pm | Permalink

        Indeed linking it to unemployment seem rather a big mistake to me. The artificial bubble being organised, is very unlikely to allow the Tories win in 2015. The betting odds say they have about a 20% chance and that looks rather optimistic given the direction of Cameron’s travel.

        Silly comments from Cameron about a particular court case today I see. Has he nothing sensible to do with the economy in such a mess and the state sector still wasting cash hand over fist?

        • JimF
          Posted August 7, 2013 at 6:22 pm | Permalink

          No, we have to interfere with the judiciary, whom, I thought, were supposed to be impartial, but only when it suits politicians.

          The link between interest rates and unemployment is daft, when looser regulation could change the employment scene in a few months.

          Our Company has been waiting for Building Regs approval to build a new industrial unit to house a machine to turn out widgets and employ people. A straightforward unit. The Council appear to have wandered off on holiday for a month or 2 which has delayed the whole thing and it has lost the momentum it had 3 months ago.
          The garbage talked by politicians about zero-hours contracts is also typical. They should be ENCOURAGING employers to take on people they wouldn’t otherwise employ under these contracts… surely a few hours work is better than none or the option of existing employees working overtime when other folk are sitting at home doing nothing?

          • lifelogic
            Posted August 9, 2013 at 12:49 pm | Permalink

            Indeed

      • frank salmon
        Posted August 7, 2013 at 4:28 pm | Permalink

        But also, inflation is not under control. It far exceeds wage rises. I have a feeling he means. “As long as wages stay below price inflation.’

  13. Richard1
    Posted August 7, 2013 at 8:18 am | Permalink

    (Apologies if this is a duplicate I had some difficulty earlier on the site).

    The govt needs to focus on the fundamentals & not rely on BoE special measures. What creates prosperity and growth is low, simple and competitive taxes, free trade, competitive labour markets, sound money and cheap energy. I read recently that UK consumers and businesses face paying twice what Germans do for energy. It cannot continue. We need tax cuts and the dumping of the ‘green’ agenda to get the recovery going – and win the election.

    • uanime5
      Posted August 7, 2013 at 1:03 pm | Permalink

      In other words tax cuts for businesses (how many jobs has the cut in corporation tax produced?), less rights for employees (even though most of the countries that outperform the UK give their employees better working rights), and cheap energy (just how many jobs is that meant to have created in the USA?). Any evidence that any of these things work?

      • Edward2
        Posted August 7, 2013 at 5:41 pm | Permalink

        Uni
        Richard1 never mentioned tax cuts for companies specifically, he just said “low simple and competitive taxes” Are you not in favour of this? Would you prefer high, complex and uncompetitive taxes?
        He also never ever mentioned less rights for employees he said “a competitive workforce”
        That means a flexible, well educated, well trained, skilful workforce.
        Would you prefer an uncompetitive workforce and the resulting high unemployment?
        And a recent article in the press said that nearly a million jobs had been created under President Obama and a big cause was cheap energy
        Other than that you were spot on as usual.

        • uanime5
          Posted August 8, 2013 at 4:44 pm | Permalink

          Given that low corporation tax isn’t helping companies I fail to see how lowering other taxes will. Especially when countries such as Germany have a better economy and higher taxes.

          A workforce isn’t competitive by the standards of most employers if they have rights or a decent salary. Your attempts to give a false definition aren’t fooling anyone.

          Also flexible either means being paid for as few hours as possible or being forced to work at multiple locations throughout the country. As a result of these abusive employers people have decided to not work and be poor; rather than work, be poor, and worked to death. So low employee rights cause high unemployment, while high employee rights result in low unemployment (as proven by Germany).

          What evidence is there that these jobs have been created due to cheap energy, rather than because the economy is recovering in the USA due to their huge financial stimulus?

          • Edward2
            Posted August 8, 2013 at 6:54 pm | Permalink

            Not answering any of the questions in my post just waffling in socialist clichés as usual Uni.

          • Bazman
            Posted August 10, 2013 at 3:36 pm | Permalink

            We have seen the results of corporate welfare for a number of years now. The banks being a prime example.

      • Richard1
        Posted August 7, 2013 at 6:19 pm | Permalink

        There are many excellent examples of a combination of business tax cuts and labour force liberalization leading to growth and prosperity. The UK in the 1980s, Sweden in the 1990s and 2000s and Germany in the 2000s for example. Of course there are many others around the world over the last 50 years. Personal tax cuts help also, and you must surely be aware that cheap energy is leading to a dramatic manufacturing revival in the US.

        • uanime5
          Posted August 8, 2013 at 5:15 pm | Permalink

          How do you explain that many countries, such as Germany, have higher taxes and lower labour force liberalization than the UK but better economic performance?

          Given that no one ever seems to be able to name the states or specific industries that are benefiting the most from cheap energy I’d have to say that the evidence for such a benefit it low.

          • Richard1
            Posted August 9, 2013 at 4:43 pm | Permalink

            Germany’s success is accounted for by a combination of competitiveness, especially in the eurozone, and budgetary discipline. The correlation between labour market competitiveness and low taxes and growth and prosperity is very well established and has been outlined on this site many times, though you have always denied the evidence. If you arnt aware of the extent to which lower energy prices in the US are promoting an industrial revival then you clearly have no familiarity with current US business reporting and economic data.

      • JimF
        Posted August 7, 2013 at 6:25 pm | Permalink

        You are saying the Chinese and Singaporeans give their employees better rights then? So why don’t we follow them?

        • uanime5
          Posted August 8, 2013 at 4:45 pm | Permalink

          The Government does seem to by trying to copy the low salaries of the Chinese and Singaporeans by introducing the low apprenticeship wage and several programmes forcing the unemployed to work for free.

          • Edward2
            Posted August 9, 2013 at 4:38 pm | Permalink

            Not “work for free” Uni
            Work for the benefits they get from society which can be up to £26,000 net of tax which is equal to over £30,000 gross.
            I would have thought someone with your sense of community would have felt doing some work for society would have been a fair return and even a useful way of encouraging the confidence needed and developing a routine so as to prepare for an eventual successful return to the world of work.
            All socialist societies allocate jobs to their citizens and require work to be done in return for the social wage eg USSR and currently Cuba.
            Unemployment is not allowed.
            Is this something you are for or against?

  14. Mike Wilson
    Posted August 7, 2013 at 8:33 am | Permalink

    ‘ … Labour wish to highlight this, but they should remember the worst of the squeeze occurred in 2008 and at the end of their period in government. …’

    The ‘squeeze’ really started 10 years before that, as globalization got into its stride. Living standards did not go up under Labour – people were re-mortgaging every 2 years to pay off their credit cards.

    It is a global game these days. And any country that allows house prices to keep going up, against a backdrop of stagnant or falling wages, is guaranteeing that people will have to borrow more to buy a home and spend more on mortgages or rent.

    Which is why the bloody government’s underwriting of mortgages and house prices is a bloody scandal – and UTTERLY stupid in a global economy.

    High house prices demand high wages which mean we can’t compete. When are you going to realise this?

    • zorro
      Posted August 7, 2013 at 8:42 am | Permalink

      It is clearly bonkers bubble blowing…Already we see the daily headlines…’homeowners joyful at 6th monthly rise in a row’…..History repeating itself again and again and again…

      zorro

      • Jerry
        Posted August 7, 2013 at 9:03 am | Permalink

        @Zorro: Indeed, now compare that with the attitude in Germany, were renting is still seen as an option rather than the last resort for those who can’t access deb… sorry, credit/mortgages, and were many consider that wages have not risen in 20 years, yet the country is one of the most successful in Europe (and I mean Europe, not the EU) whilst Germany is currently bankrolling much of the EU/EZ…

        • Mike Wilson
          Posted August 7, 2013 at 2:29 pm | Permalink

          @Jerry: People often mention Germany / renting in relation to comments about our housing market.

          I’d like to make the point though that renting in the UK and renting in Germany are like chalk and cheese. In Germany long term renting is the norm. Landlords own properties for generations and they are rented out at affordable rents and people make their HOME there. They can decorate as they wish and even upgrade the kitchen/bathroom etc.

          In the UK, starting mainly during Labour’s recent tenure, we have had the emergence of ‘the Buy to Let landlord’. Nearly everyone I know seems to have jumped on the bandwagon over the last 15 years. They re-mortgaged their own property to get at some of the equity, used it as a deposit to buy another property, rented it out under Assured Shorthold Tenancies and stood back while someone else worked like a dog to pay them their rent so they could pay the mortgage. Nice work if it suits you! It doesn’t suit me as it would make me feel like a scumbag. Simply exploiting the fact that I am credit worthy and getting someone else to pay my debt off for me.

          And, of course, the wonderful Assured Shorthold Tenancies were introduced by the last Tory government. These are truly disgusting. Just 6 months assured tenancy – you can be kicked out on your ear whenever the landlord feels like it – you get inspected by the landlord’s agents every 3 months and, in most cases, you can’t even put a picture up without permission. That’s not ‘renting’, it is servitude.

          And, as we saw on the box the other night, some landlords are building up portfolios of hundreds of properties and renting our squalid little rooms to desperate people, many of whom are on benefits. This is even better! As the tenants are on benefits, we, you and I, are paying taxes to pay the rents so the landlords can buy their properties. After 25 years they can sell the properties off and will be as rich as Croesus, courtesy of us.

          You really could not make up some of the things bloody governments get up to.

          • Jerry
            Posted August 7, 2013 at 5:52 pm | Permalink

            @Mike Wilson: “Assured Shorthold Tenancies” came in during the Major government, whilst the “Assured Tenancy” came in during the Thatcher government, replacing (or at least superseding great swaths of) the Rent Act of 1977 that gave tenants the greatest protection.

          • Edward2
            Posted August 7, 2013 at 6:14 pm | Permalink

            You can always buy a home if you don’t like to rent Mike. In many instances is works out cheaper to buy than rent.
            I know some “wicked” “buy to let landlords who have not been successful, having been ripped off by rogue tenants or high repair costs or nor being able to find tenants to rent their properties.
            It is a very competitive market and is not an easy way to make money now with returns on capital of 5% or less and low asset price rises in most areas outside London as well as a lot of regulations to comply with..
            Its a big risk to take when you can leave your money in the bank and get 3%
            I remember the days before the short term rental agreements came in when there were few properties available to rent.
            I also remember the era of mass Council housing and having a Local authority for a landlord wasn’t too brilliant either with long waiting lists, badly maintained properties and high rents.

          • Jerry
            Posted August 7, 2013 at 8:16 pm | Permalink

            Edward2: “You can always buy a home if you don’t like to rent Mike. In many instances is works out cheaper to buy than rent.

            Only if you can either buy for “cash” or can obtain a mortgage (or some other financial agreement).

          • Edward2
            Posted August 8, 2013 at 1:06 pm | Permalink

            Thanks Jerry I hadn’t worked that one out.
            The point still is, that you need to have a roof over your head and you can rent or you can buy.

            In many instances renting is more expensive than buying and after approx. 25 years of paying rent you have nothing whereas after approx. 25 years of paying a similar amount per month to the building society you end up the owner.

          • Bazman
            Posted August 10, 2013 at 3:41 pm | Permalink

            Council housing had a lot of shortcoming for sure, but at least their was some. Now it is all owned by rich landlords renting it back to the state. We are not talking about a person hedging their money on one or two house and all the hassle that goes with that for often not great returns and often losses.

      • Nina Andreeva
        Posted August 7, 2013 at 9:21 am | Permalink

        I could not agree more we are heading towards the advanced stages of Argentinian style debtoholism. Have a look at some of the videos on Youtube and see what Buenos Aires was like in 2001 as a portent to what our big cities will soon be transformed into.

        • Edward2
          Posted August 7, 2013 at 12:17 pm | Permalink

          You maybe right Nina, if Labour were to get in again and start increasing taxes, increasing borrowing and increasing spending like they did under Brown then we could end up like Argentina.

          • uanime5
            Posted August 7, 2013 at 1:06 pm | Permalink

            How will the Conservatives be different given that they’re increasing taxes (I believe they’ve created 239 new taxes), borrowing is at much the same level as Labour (£120 billion per year), and they’re spending billions on pet projects (academies)?

          • Mike Wilson
            Posted August 7, 2013 at 2:51 pm | Permalink

            @Edward2 – this has nothing to do with Labour, in particular. It has everything to do with every post war government which have been complicit in building a huge client state that we cannot afford.

            Sure, Labour were a disaster.

            But so were the Tories.

            In my book, just because the Tories are not quite as bad as Labour, does not make them worthy, or capable of, government.

          • Mike Wilson
            Posted August 7, 2013 at 9:52 pm | Permalink

            I want to reply to Edward 2.

            I don’t rent at the moment. I did rent a while ago as it suited me not to be tied down to one place. Couldn’t stand it though, so bought again.

            I was brought up in a council house in the era of mass council housing. The properties were maintained just fine. Decorated without fail every 5 years. Any problems were fixed. And, long after we had all left home, Mum’s house had a new kitchen, bathroom and partial central heating installed. And the vast majority of tenants kept immaculate front gardens with neat lawns and flower beds and with a garden full of vegetables at the back. On a Sunday you could look along the gardens and see a man in every one tending his vegetables.

          • Edward2
            Posted August 8, 2013 at 1:14 pm | Permalink

            Yes Mike there were some very good examples of Council housing as you have so eloquently described.
            Several of my family have in the past benefitted from similar good Council homes.
            The Bournville Estate and the Calthorpe Estate in Birmingham are excellent examples.
            And we now have some good housing associations working with the Council to provide much better affordable homes for rent or part ownership.
            But in many major Cities the tower blocks and the sink estates still remain and are very poor in all respects.

    • Paul H
      Posted August 7, 2013 at 11:52 am | Permalink

      No reply to this from Mr Redwood because he has none – and doubtless knows it. Osborne is trying to buy the next election with our money.

      Of course inflate the debt away is the name of the game – at the same time as continuing to grow it. Carney has now more-or-less formally abandoned the inflation target for an employment target (with enough get-out clauses to change it to whatever-he-likes in the future), whilst our intelligence is insulted by (a) the BoE with the perpetual claim that inflation will be back down within two years, and (b) Osborne claiming that the government is still “absolutely” commited to the inflation target.

      • JimF
        Posted August 7, 2013 at 6:41 pm | Permalink

        Yes, a total muddle. The inflation target will, I guess, now be called a “soft-target” and the unemployment yardstick will be used to determine interest rates. This effectively gives the government a license to print “unemployment-related” money until there is some false low level of unemployment at which time rates can rise and pop the bubble.
        They’re looking in the wrong place. It’s deregulation, stupid.

  15. miami.mode
    Posted August 7, 2013 at 8:42 am | Permalink

    The 0.5% Bank Rate was introduced as an emergency measure and I feel its continued use is gradually changing the structure of our society particularly in housing. There are many complicating factors at work here but the basic fact is that more people are renting and fewer are buying and the latest measures for buying are already pushing prices up.

    The government seems to be obsessed with the GDP figures that reigned during 2007/08 but surely these were largely based on enormous debts that were never going to be fully repaid and were therefore not true figures.

    • Leslie Singleton
      Posted August 7, 2013 at 10:29 am | Permalink

      miami–Given that GDP includes any and all activity whether (ridiculously to my mind) useful or not why doesn’t the Government bring in measures that will (artificially) increase GDP (so Job Done). Ideas are two a penny. I offer (mediaeval) Fish Ponds. Just think if every household (with a garden) were forced to dig a Fish Pond (Dams, Sluices, Leats, Smoke Houses the whole bit) for the rearing of Carp, as used to be done all over, GDP would, we are told, be increased by the construction of the Ponds and later the production, if that’s the word, of the fish and given how GDP is constructed, how can that go wrong? Sort of related to Keynes and his holes in the ground.

    • Mike Wilson
      Posted August 7, 2013 at 2:55 pm | Permalink

      @Miami-mode ‘ … The government seems to be obsessed with the GDP figures that reigned during 2007/08 but surely these were largely based on enormous debts that were never going to be fully repaid and were therefore not true figures. …’

      Spot on! We (I don’t mean me!) seem to have this obsession with endless growth in GDP. As you say, the 2007/8 GDP figures were the culmination of a decade of explosive growth in consumer debt. In 1997, as consumers, we owed a total of about 650 billion (mortgage + credit card + bank loans etc.)
      By 2007 this had gone up to 1.43 trillion. An increase of 780 billion, or about 78 billion a year. 78 billion is about 2% of GDP. You can make a good argument that every bit of growth during Labour’s years of misrule were based on the fact that, every year, consumers borrowed and spent 78 billion pounds.

  16. zorro
    Posted August 7, 2013 at 8:46 am | Permalink

    John, did you see the BBC programme with the reporter and his family living in Germany trying to find out the key to their economic success. Some useful pointers there…

    zorro

    Reply No – what were the main points?

    • Jerry
      Posted August 7, 2013 at 9:16 am | Permalink

      Zorro and JR reply: For the next 6 days (streaming) on the BBC iPlayer – http://www.bbc.co.uk/programmes/b038669g

      I suggest that all the most anti German watch, at least once, I will be watching it again later to pick up on what was missed in the first viewing…

    • Atlas
      Posted August 7, 2013 at 9:28 am | Permalink

      I agree zorro, it was a useful and in its own way informative programme.

      The Germans were shown as a tightly focussed people (work hard – play hard) – in strong contrast to the British who came over as sloppy.

      • uanime5
        Posted August 7, 2013 at 1:08 pm | Permalink

        Well you can’t expect hard work from people who are paid as little as possible, have no job security, and don’t even know how many hours they’ll be working per week.

        • frank salmon
          Posted August 7, 2013 at 4:35 pm | Permalink

          Nor can you expect it from public sector employees. ‘Sloppy’ truly describes the culture of our public services, welfare, state TV, railways, Postal services etc etc

        • Edward2
          Posted August 7, 2013 at 5:55 pm | Permalink

          Uni
          Industrial wages in Germany are not much higher than in the UK but there is a better standard of living due to cheaper energy costs transport costs, taxes and food costs.
          If you are moaning about “zero hours contracts” again, then these only apply to a small percentage of employees despite recent fast growth and a survey reported that over 80% were happy with the hours offered and the pay they received and that they enjoyed the flexibility it gave.

          • uanime5
            Posted August 8, 2013 at 6:11 pm | Permalink

            In the BBC documentary the man was paid €2,804 a month for looking after 3 machines in a pencil factory. This works out at £2,414.50 per month. Given that he only had to work 35 hours per week he was getting £17.25 per hour. In the UK you would get paid between half to a third of this. So your claim that German wages are much the same as UK wages is clearly wrong.

            You also ignored that Germany has higher taxes because it doesn’t fit into your right wing ideal of what makes society work.

            Zero hours contracts apply to millions of people and are only being used by companies because they don’t have to give their employees sick or holiday pay. Also what survey are you referring to?

          • Edward2
            Posted August 9, 2013 at 7:47 am | Permalink

            If you use your example of one man working in a pencil factory then I hardly think you can expand that to the whole of Germany and make comparisons to the whole of the UK
            Interesting use of statistics on tax Uni.
            Germans pay more in total because their economy is bigger but their rates are not much different to UK

        • nina Andreeva
          Posted August 7, 2013 at 5:57 pm | Permalink

          Watch the program and learn something! There is no minimum wage in Germany and in the east its quite common to see people taking cleaning jobs for a Euro an hour (around 82p). You also need to do some of your highly accurate research into Hartz IV and Agenda 2010 and see how secure jobs are there too

          • uanime5
            Posted August 8, 2013 at 6:13 pm | Permalink

            In the BBC documentary the man was paid €2,804 a month for looking after 3 machines in a pencil factory. This works out at £2,414.50 per month. Given that he only had to work 35 hours per week (8 hour day with an hour off for lunch) he was getting £17.25 per hour.

            Also either provide evidence that people are working for €1 per hour in Germany or admit that you just made this up.

          • Bazman
            Posted August 10, 2013 at 5:26 pm | Permalink

            Germany does have a minimum wage agreed with the unions.
            http://www.wageindicator.org/main/salary/minimum-wage/germany
            £0.82 an hour minimum wage is no good to anyone except the employer and don’t recommend such wages etc ed

        • JimF
          Posted August 7, 2013 at 6:44 pm | Permalink

          Why?
          If the choice is starvation, which the Germans faced after WW2, I think you can.

          • uanime5
            Posted August 8, 2013 at 6:14 pm | Permalink

            Your post indicates that you have no understanding of the effects of starvation on the human body. Here’s a hint it doesn’t make people better workers.

            You’ve also ignored that Germany doesn’t produce high quality products by starving their workforce.

        • Lindsay McDougall
          Posted August 8, 2013 at 3:25 pm | Permalink

          I seem to remember that, in the hot lead newspaper era, members of the print unions were fabulously paid and were on strike a lot of the time. How does that fit in with your theory?

          • uanime5
            Posted August 8, 2013 at 6:16 pm | Permalink

            Care to explain how paying people a pittance and no job security is going to motivate them to work hard?

          • Bazman
            Posted August 10, 2013 at 3:46 pm | Permalink

            Agree with many of you arguments uni, but how do you explain the ‘council house attitude’ held by many? Blaming everything ‘On the council’. The door sticks but waits until it rips the hinge off then blames the council. Buy some oil? What? And so on…They will never change no matter how much money is throw at them. A real problem.

    • John Eustace
      Posted August 7, 2013 at 9:36 am | Permalink

      I didn’t see it either but let me guess and zorro can mark my answer:
      1. Hard work.
      2. Sound money and stable house prices.
      3. Engineering and manufacturing excellence making products of high quality in demand around the world.
      4. A strong education system leading to well structured career options with proper technical training for apprentices, not just those that go on to Universities.
      5. A financial system that serves the economy, not the other way round.

      It’s about time that we started listening to the Germans. Prince Albert told us where we were going wrong and tried to address the issues 17o years ago.

      • Jerry
        Posted August 7, 2013 at 1:58 pm | Permalink

        @John Eustace: Are you sure you didn’t watch the programme, even if in your sleep?! – Spot on…

    • backofanenvelope
      Posted August 7, 2013 at 9:44 am | Permalink

      Compared to English society, German society is very regimented. Stay in line or else!

      • Jerry
        Posted August 7, 2013 at 2:02 pm | Permalink

        @backofanenvelope: As was our own society once upon a time, and not so long ago, but then we seemed to loose sight of society for the “me and my own”…

    • lifelogic
      Posted August 7, 2013 at 10:30 am | Permalink

      They did mention that their were very few Woman on boards of directors compared to the UK. I don’t think that will go down very well with Cameron types.

      Simple more engineers, fewer lawyers (and a legal systems with a proper balance of risk), a simpler tax system, lower taxes, a smaller far more efficient state sector, fewer transfers to the feckless, fewer people at University more at tech colleges and more cheap gas and coal energy.

      • lifelogic
        Posted August 7, 2013 at 10:32 am | Permalink

        Sorry “there” for the pedants.

      • uanime5
        Posted August 7, 2013 at 1:10 pm | Permalink

        Given that Germany’s tax system is much more complex than the UK’s tax system, their taxes are higher, their state is larger, and their benefits are more generous it seems that many of your suggestions are the oppose of what the UK should do if we want to copy Germany.

        • lifelogic
          Posted August 7, 2013 at 4:03 pm | Permalink

          Why do you not check any facts? This is simply not true.

          • uanime5
            Posted August 8, 2013 at 6:24 pm | Permalink

            lifelogic I have checked my facts. Just because it doesn’t fit your right wing delusions that the only way to be successful is with a small state, low taxes, and by brutalising the workforce doesn’t make it wrong.

            German tax law is very complex due to the numerous exemptions and deductions available. One example is that they have 7 forms of income tax.

            Germany collects more in taxation as a percentage of GDP than the UK.

            The benefit system in Germany is based on how much you earned in your last jobs, not a small percentage of minimum wage.

            Now lifelogic either provide evidence that my claims are wrong or admit that I am right and you are wrong.

          • Edward2
            Posted August 9, 2013 at 7:54 am | Permalink

            Are you really saying Germany or the UK brutalises its workforce Uni?

            Who are these companies?
            Perhaps you should report them to the relevant authorities.

          • Bazman
            Posted August 10, 2013 at 5:17 pm | Permalink

            There is less regulation and tax in Germany? Get real as uni say you are deluded if you believe this.

          • Bazman
            Posted August 10, 2013 at 5:29 pm | Permalink

            Germany also also a middle class society and this has not been achieved by a race to the bottom and other free market fantasy with the belief that the aristocracy is there because of their intelligence as you often state indirectly.

    • zorro
      Posted August 7, 2013 at 10:39 am | Permalink

      It was a BBC2 programme – ‘Make me a German’ – see link http://www.bbc.co.uk/programmes/b038669g

      It was trying to find the secret of how the Germans work fewer hours, yet they are more productive and their economy is the most successful in Europe. Justin Rowlatt, his wife, and two of his children tried to mirror the life of the average German. It involved him working in a pencil factory – well worth viewing to give a flavour of why Gerany successful. The main points for me were as follows.

      1) Availability of good quality, cheap rental accommodation on long remember basis – allowing for a sense of community to be maintained. 50% rent and no stigma attached to this. Also leads to stability and sensible prices in market so that people have money to spend and invest.
      2) Germans on average save 10% of income so more can be reinvested in economy. In the UK the figure is 1%.
      3) Quality goods made by medium sized firms who export well abroad. The German export record is excellent……75% of cars in Germany are made in Germany.
      4) Excellent work ethic in supervising production/maintaining machinery.
      5) Loyalty to firms which treat workers well leads to better productivity
      6) Family life is supported well, including provision for children – good tax breaks for families.
      7) Point was made that in last 20 years living standards ain’t aimed even with huge cost of incorporating East Germany.
      8) On social side, football clubs not allowed to be dominated by billionaires (golden share) thus allowing fans to be more connected with running f club and ticket prices cheaper.

      zorro

      • zorro
        Posted August 7, 2013 at 10:40 am | Permalink

        Excuse my iPad spelling, I had to do this quickly.

      • zorro
        Posted August 7, 2013 at 10:41 am | Permalink

        Living standards have been maintained.

      • zorro
        Posted August 7, 2013 at 12:45 pm | Permalink

        9) Impression of a more disciplined society, self policing in a way I guess.
        10) last but definitely not least…..no obsession with unnecessary university degrees. 50% of school leavers enter into practical, industrial related courses…..apprenticeships – training and maintaining a skilled workforce.

        zorro

    • Acorn
      Posted August 7, 2013 at 12:13 pm | Permalink

      The pay-back horizon in the UK is about 3 months, or the time to the next stock market update at most. That comes down to about 3 milliseconds for high frequency trading. http://www.dailymail.co.uk/money/news/article-2385752/OPINION-Overseas-deals-fast-track-oblivion.html .

      Why ‘casino banks’ need to be reformed by Keith Robertson. “The problem lies with what business secretary Vince Cable calls the ‘casino banks’, a nicely precise definition. These investment banks make their profits from two principal sources: fees and investments. Eye-watering fees are charged to corporations for various services, mainly capital-raising and merger and acquisition advice.

      Although such fees add to the bottom line of banks and in theory generate tax (though these institutions are acknowledged experts in tax avoidance), they come off the bottom line of the corporations that have been advised, which will thereby pay less tax by a similar amount. Whether the fees charged result in proportionate increased productivity is debatable. Certainly, mergers and acquisitions have a history of boosting pre-merger corporate egos rather than post-merger profits and synergies. http://citywire.co.uk/new-model-adviser/why-casino-banks-need-to-be-reformed/a472647 .

      • Acorn
        Posted August 7, 2013 at 4:59 pm | Permalink

        I see our new BoE governor is saying that 7% is now the acceptable level of unemployment, before he will throttle back his monetary stimulus.

        I expect the coalition neo-cons squirmed a bit when he mentioned it because nobody mentions unemployment much in this government. It is one of those things that only really affects little people. What’s more, there isn’t a market in unemployment derivatives or collateralised unemployment obligations … yet.

        Reply I suspect Ministers were delighted by MR Carney, as he seemed to be saying interest rates stay low unless and until unemployment is lower. Getting unemployment down is a major aim of the government.

        • JimF
          Posted August 7, 2013 at 9:07 pm | Permalink

          Regardless of inflation i.e. a dangerous change of policy or paying attention to inflation i.e. no change?

    • Atlas
      Posted August 7, 2013 at 2:00 pm | Permalink

      As a postscript to my earlier post:

      I was greatly moved by the feeling that German mothers put their children first – and not something that had to be shuffled off to a nursery as soon as possible. I think they have the right priorities.

      It was the complete opposite of the line the UK Government is taking with regard to the family. Why do we have a class of politicians who want children to be denied fun and enjoyment at an early age? What miserable experiences have they, the politicians, had I wonder?

      • Atlas
        Posted August 7, 2013 at 2:01 pm | Permalink

        Ooops, sorry, I’ve sent my previous post to the wrong posting topic.

    • forthurst
      Posted August 7, 2013 at 4:35 pm | Permalink

      Re Make Me a German. – BBC

      “Reply No – what were the main points?”

      I don’t normally watch docus, however with Zorro’s recommendation:

      The BBC journo was on an average German wage doing a job which was semi-skilled, despite his rather grand title, much like that of a BBC journo, in fact.

      His monthly salary (Euros) was shown (copied off screen and translated by google with amendments plus spreadsheet):

      compensation premiums ? 341.64
      monthly wage 2252.64
      Travel Allowance 7.20
      Constant shift allowance 200.52
      gross pay 2802.00

      income tax 188.83 6.74%
      health insurance 229.76 8.20%
      pension 264.79 9.45%
      unemployment 42.03 1.50%
      Old age care 28.72 1.02%
      (net deductions) (754.13) 26.91 %
      statutory net 2047.87 73.09 %

      Not explained was whose schemes the deductions related to or what was the employer’s contributions to each scheme or what were the actual benefits provided (starvation, dehydration etc). Deduction percentages calculated on Gross which may not be how they are derived. Annual factory performance bonus not included in this normal month.

      (Wont line up properly because copied out of spreadsheet, but hope it doesn’t jump too much)

      • uanime5
        Posted August 8, 2013 at 6:31 pm | Permalink

        So before taxes he earned €2,802.00 or £2,412.44, and after taxes he earned €2,047.87 or £1,763.28 per month. I doubt that he’d be able to earn that much doing a similar job for 35 hours each week in the UK.

  17. peter davies
    Posted August 7, 2013 at 10:27 am | Permalink

    “Labour wish to highlight this, but they should remember the worst of the squeeze occurred in 2008 and at the end of their period in government” I think your being very mild in your language, Mr Redwood – labour spending policies, stupid anti business EU treaties and the financial regulatory framework are the things that led to this mess – in my opinion the Tories would do well to highlight this far more strongly.

    As for energy policy, fracking needs to take off but our energy policy is a total shambles which needs sorting out – unless this is the case we face more of the same. A local chip shop owner told me that 20% of his overheads are energy related – this cant be right.

  18. Gary
    Posted August 7, 2013 at 11:03 am | Permalink

    Carney says we are going to keep printing until unemployment falls. If only Robert Mugabe had been so lucky.

    Insanity

  19. Lindsay McDougall
    Posted August 7, 2013 at 1:11 pm | Permalink

    Unfortunately, the confidence behind the rush to the shops and higher house prices has come from a lower savings ratio and, in all probability, higher average household debt.

    The whole process is dependent on interest rates remaining low for some time and Mr Carney’s remarks this morning gave some assurance on that, although he does have an escape clause if inflation takes off. Quite how Mr Carney can describe inflation in excess of 2% as “price stability” is beyond me. Has someone changed the English language overnight? Mr Carney, zero inflation is price stability.

    Mr Carney also made the classic error of attributing general price inflation to particular cost push causes. It’s the flood of easy money that’s doing it.

    • zorro
      Posted August 7, 2013 at 6:08 pm | Permalink

      I suppose that it’s a kind of hubris….Perhaps they actually think that ‘they’ can ordain that interest rates will stay at 0.5% for the next three years at least because they say they will or perhaps it’s a delusion on their part….subject of course to inflation not rising. How any sane business owner can put trust/comfidence in these predictions is beyond me, bearing in mind that we have a massive trade deficit, large uneployment, £120bn annual deficit, rapidly increasing debt approaching £1.5tn……and we have printed nearly £400bn to effectively cover government overspending.

      The only way that they will guarantee this interest rate freeze is by further QE in the face of increasing inflation which they will not be able to control in their rush for growth. They will, of course, ignore the 2% inflation target and say it is not important (well, it isn’t for them).

      zorro

      • Lindsay McDougall
        Posted August 8, 2013 at 3:17 pm | Permalink

        I did think that rising tax revenue would have led to reduced government borrowing. Not a bit of it; government expenditure is also rising. Meanwhile, the Chancellor has just announced a £1bn pa tax break for wealthy career women in the form of a subsidy for child care. And the Prime Minister has just announced £500 million to help under performing A & E departments.

        IF YOU’RE SPENDING TOO MUCH, SPEND LESS.

        Repkly: Spending less would be good. The A and E money comes from elsewhere in the Health budget, so it is not additional to plans already announced overall.

  20. uanime5
    Posted August 7, 2013 at 1:13 pm | Permalink

    The figures show that spending is increasing at much the same rate savings are decreasing, so it’s possible that this growth will only last until people’s saving are exhausted. At which point growth will collapse.

    Labour had the excuse of the recession caused by the 2008 financial crisis, the current Government does not.

    Given that most job adverts want someone with experience I’d say that companies aren’t spending more on training, which is why youth unemployment is still much higher than the average unemployment. Though this problems had been occurring in the UK for many decades.

    • Edward2
      Posted August 7, 2013 at 6:01 pm | Permalink

      Still nowhere as bad as in your beloved EU Uni, where youth unemployment overall is twice the level of the UK
      50% in Spain and Greece and rising towards that level in Italy and Portugal
      I expect you will say its not the fault of the EU at all and that it is “a price worth paying” to get these countries back into line and obeying the EU’s rules on running their economies.

      • uanime5
        Posted August 8, 2013 at 6:39 pm | Permalink

        Given that the youth unemployment level in the UK is 20% this would mean that it would need to be at least 40% in the EU to be twice the level of the UK.

        The high average youth unemployment level in the EU is occurring because the average is being pushed up by very high youth unemployment levels in a few countries (Spain, Greece, Italy, and Portugal). If you look at the individual youth unemployment levels you’ll find that the majority of EU countries have youth unemployment levels below the average level; indicating that the main problem is with a few badly run countries rather than the EU as a whole.

        • Edward2
          Posted August 9, 2013 at 8:00 am | Permalink

          Uni
          Youth unemployment is higher in the EU than in the UK or USA
          Just because you don’t like this fact doesn’t make it untrue.
          And no amount of excuses or waffling about averages will alter this sad fact.

  21. Vanessa
    Posted August 7, 2013 at 2:01 pm | Permalink

    Carney obviously could not care less about pensioners. All those people who have saved over their lifetime – and their numbers are growing – seem to be invisible and off the radar of this government. Shame, because they ALWAYS vote!

    Printing money and borrowing money ad infinitum will not get the economy moving. It just piles up the debt ! Why are we, the public, NOT allowed to print our own money ? Because it messes up the economy and produces inflation !!!

  22. Martin
    Posted August 7, 2013 at 3:40 pm | Permalink

    I note that the new BofE governor is reported ( http://www.telegraph.co.uk/finance/bank-of-england/10228255/Bank-of-England-ties-interest-rates-to-fall-in-unemployment.html ) as seeing ultra low rates of interest as being linked to the unemployment level (not sure if it is Claimant count or the overall higher number).

    This strikes me a a new school of economic thought. The monetarists used to believe that inflation was controlled by interest rates. Now there is some magic 7% unemployment figure that is the target for interest rates.

  23. frank salmon
    Posted August 7, 2013 at 4:44 pm | Permalink

    I wonder if the BBC would consider a program called, ‘How to make Britain more Prosperous’. They could then use Mr Redwood to front it and explain that if only we were more like the Germans……. If only were were less sloppy in our public sector provision and more direct in our accountability to our children and others, and if only we cherished our manufacturing capabilities…….

    Fat Chance

  • 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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