Old habits die hard

 

          The latest figures show imports rising more quickly than exports and state borrowing at record levels. Public spending has been growing at more than 5% in cash terms during  April to November compared to the same period last year.

¬†¬†¬†¬†¬†¬†¬†¬†¬† This matters more than the well justified¬†¬†¬†reduction in Dr Cable’s responsibilities following his ill judged remarks on the Murdoch businesses.¬† The UK needs to borrow and import less, and export and earn more. The public debate still concentrates on cuts instead of looking at the overall picture, where the UK is still running a lot of financial risk in difficult times.

25 Comments

  1. Nick
    December 22, 2010

    Where do you get the cash term figure from and what does it mean?

    Your spending as a government is up 10.8% Nov to Nov.

    Is the 5% spin?

    reply: No, its seven months of this year so far compared to same seven months of last year. It’s the Coaltiion government.

  2. Brian Tomkinson
    December 22, 2010

    “The public debate still concentrates on cuts”; yes- but the government keeps spending and borrowing more! Now that Cameron has shown his weakness by retaining Cable, not just in the cabinet but in a role essential for future growth, after he has been seen to be so untrustworthy, he will come under even more pressure to abandon what cuts he is planning. This government is now shaping up to be no better than the last one. Really their only plan is to tax and inflate and there is still a good chance that because of them we will still end up looking like Ireland.

    1. lifelogic
      December 22, 2010

      I suppose cable is at least slightly up market of Baron John Prescott but not quite as funny.

      On the wider point they have only about 3-4 years left in which to turn the super tanker towards round and for the electorate to notice the benefit. It might be good if someone at least started to move the rudder over and chucked half of the state sector overboard to lighten the dead weight. So far they have not even said the right things let alone done them.

  3. Damien
    December 22, 2010

    Taken together the views of Dr Cable on super tax on bonuses and other banking operations, land tax for the wealthy and now this latest personal attack or “war” on a prominent business man I am starting to wonder if he can really remain in post as Business Secretary. We need a coalition that can free business from red tape and deliver a competitive rate of corporation tax. Although there is much debate on cuts there is little action and any significant reductions in welfare spending cuts have been postponed until 2013.

    I am old enough to remember the ‘buy British’ drive however we are so cowered by the PC brigade and the Euro mob that I suppose to even suggest it would condemn me however I am beginning my own personal effort to support local producers and manufacturers when the January sales arrive by buying British !.

  4. Andrew Slough
    December 22, 2010

    I’m pleased at our increased capital account surplus.

  5. alan jutson
    December 22, 2010

    The news on this front is likely to get worse as we import ever more with a devalued pound (due to printing money)

    As a Country we no longer produce enough goods from our shrinking manufacturing base, to export in enough volume to counter the imports.

    For years politicians did not understand the importance of the Manufacturing industry, and regarded it as an industry which could be lost, as they thought people did not want to do manual or repetitive work, hence promotion of white coller jobs, service industry and finance at the expense of blue coller manufacturing. This twisted logic which employed millions, and at one time made the UK the powerhouse of the world, is the same more recent twisted logic that was used to promote the belief that 50% of people should go to University.

    The folly of both thoughts is now showing its true colours, and the results of such failed logic, show with increasing National debt.

    We are falling down the World league table of prosperity, and the rate of fall is gaining speed as more and more Countries overtake us.

    1. Andrew Slough
      December 22, 2010

      “The news on this front is likely to get worse as we import ever more with a devalued pound (due to printing money)”

      Isn’t that back to front? If you devalue your currency, foreign goods become more expensive and your goods become cheaper to foreigners. So you get fewer imports and greater exports.

      1. alan jutson
        December 23, 2010

        Andrew

        Is this back to front, I do not think so.

        We have to spend more Pounds to import the same amout of goods. So more or our money flows out.

        Given our exports are low, the advantage of a low pound to make us more competitive abroad, does not bring in as much income, as volume of our sales (due to a low volume of manufacture) do not increase by much.

        But I am of a simple mind.

        Example:

        I am just upgrading our house having built it myself 30 years ago. Not a single part of the kitchen I am installing is made in the UK, other than the Chipboard carcass (low tech). All appliances are German. The tiles are Italian, the self leveling compound is French, even the bloody screws to fix everything together are made abroad. Thus most of my money is going abroad eventually after first passing through UK distributors.

        We are rapidly getting to the stage where we produce next to nothing in the UK.

        Would I have liked to have purchased British, Yes. Was there a British manufacturer who could supply me with comparable quality goods, No !

  6. JimF
    December 22, 2010

    These figures might well deteriorate in the months ahead.
    A year ago the Pound was in the doldrums vs. the Euro, and now it has ticked up to a point where we don’t have any real competitive advantage with the Eurozone.
    As for companies investing right now in the UK, my impression is that there is worry about further tax measures ahead, just as there was with Labour. The manufacturing outlook isn’t actually too bad here at the moment, but why take risks to buy expensive machinery and extra labour here to make a notional profit here which gets whipped away with decreased capital allowances, corporation tax at levels above the 13 year Labour average, pension contributions and retirement schemes knocked away, and income tax increased?

  7. Alte Fritz
    December 22, 2010

    I substantially agree with Alan Jutson. Why, I wonder, are we told that manufacturing industry is healthy and our manufacturing base more substantial than is realised. Certainly, there are healthy manufacturers, but the evidence of one’s own eyes speaks to our national weakness.

    I cannot, will not, believe that it is too late to tip the balance. We can improve education and training to equip the young with skills which are needed. That will help make it an attractive career. We can revisit capital allowances to encourage investment. We can invest in projects to help SMEs to develop new products and work on new designs.

    The spirit of enterprise is there. It needs the right climate. We can encourage the banks to support small business and not concentrate on big vanity projects. All this involves governemnt doing things, or, even, interfering. But we can change the model of how governemnt intervenes, not by diktat but by invitation with continued involvemnt based on results.

    We willnever again be the workshop of the world but we can be a lot more than we are.

  8. Demetrius
    December 22, 2010

    All the various fusses recently suggest that the government is losing the plot. Especially when I see what DC has actually been doing this week, as well as too many of the others.

  9. Boudicca
    December 22, 2010

    Only drastic action will stop this Government from borrowing. That means stopping payments to the EU and refusing to borrow to prop up the Euro. That will save us £45million a day at current levels. If the Euro needs propping up, the Eurozone countries should do it. Otherwise, let it fail.

  10. Ken
    December 22, 2010

    At a time when we should be accelerating cuts (that’s pretty obvious now), we are having trouble with the cuts already agreed.

    By fudging and retreating, the sharp message that we must urgently correct the deficit is being blunted.

    If the Liberals cannot accept the bold decisions and the bold message that must be conveyed I think we are better to have a general election now than wait until Labour’s fortunes improve aided and abetted by the BBC. I think that the longer the Conservatives and Liberals cling onto each other the worse things will get as messages and policies are increasingly blurred and softened.

    The Conservatives will need a USP. That in my view should be a referendum on a Lisbon treaty renegotiation

    We all know that this will be popular. This time, with what has happened with the Euro I doubt if there would be any great fall out in the Conservative Party should such a bold policy be put into the manifesto (there would be casualties, but surely fewer than, say, 2 or 3 years ago) and where would they go, the Liberal Party?

  11. lifelogic
    December 22, 2010

    Difficult to see exports rising when HMRC, the non lending banks, over regulation of everything and overpriced energy is all so set against them. What will HMRC staff do after they have finished closing all the businesses down?

  12. Denis Cooper
    December 22, 2010

    Yet we can afford to have the government borrow more money to lend to the Irish government so that it can ensure that private investors in the private banks based in Ireland don’t have to take any losses on their ill-judged investments.

    And from what Cameron said in the Commons on Monday:

    http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm101220/debtext/101220-0001.htm

    we could get sucked into further illegal eurozone bail-outs before, and even after, the permanent mechanism is established in 2013.

    “… Britain is not in the euro and we are not going to join the euro, and that is why we should not have any liability for bailing out the eurozone when the new permanent arrangements come into effect in 2013.”

    On the same grounds, we should not have any such liability now, and yet:

    “In the current emergency arrangements established under article 122 of the treaty, we do have such a liability.”

    And although the new stability mechanism will be:

    “… a mechanism established by eurozone countries for eurozone countries.”

    there will be no legal bar to participation by non-eurozone countries.

    As a further aside, I cannot agree with Cameron’s

    “I must say it is profoundly not in Britain’s interest to see the break-up of the eurozone”

    given that the existence and expansion of the eurozone is clearly a very serious threat to our long term national interests.

  13. Mike Stallard
    December 22, 2010

    The Euro is in terrible trouble.
    The US Dollar is being threatened by a huge trillion dollar debt and QE.
    The dear old pound is being bucked about by incontinent governments, one after another.

    Meanwhile in Norway, prices are still high. Iceland is recovering. Australia is OK.

    Let me think. How can this be?

    1. DavidB
      December 23, 2010

      Norway – hydrocarbons, Australia – coal and iron ore. Iceland – read the comments left below the Economist article. It may be smoke and mirrors.

      So the rise of China helps mineral exporters and high tech goods manufacturers, but punishes countries that decided long ago to abandon manufacturing.

      We need to cut everything until we balance the national books. Perhaps the voters should vote a real conservative government. Or emigrate to a mineral rich country.

  14. Iain Gill
    December 22, 2010

    Yep and the UK needs to use its own residents as workers far more and have far less reliance on work visa holders with common skills

  15. Johnny Zero
    December 22, 2010

    Against a weak US Dollar the Pound touched an exchange rate of $1.53 today, the lowest position for sterling for well over a Year. A run on the Pound is not beyond the realms of possibility over coming months? The Government are talking tough but their actions have not yet even touched turning around this huge Deficit. If interest rates on UK Gilts start to rise in 2011 we could be in real trouble with inflation roaring again.

    1. Denis Cooper
      December 23, 2010

      But looking at the trade weighted sterling index, tabulated here:

      http://www.bankofengland.co.uk/mfsd/iadb/fromshowcolumns.asp?Travel=NIxIRxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&FM=Jan&FY=1963&TD=23&TM=Dec&TY=2010&VFD=Y&CSVF=TT&C=IIN&Filter=N&html.x=14&html.y=17

      the value on December 21st was 80.2, the same day last year it was 80.7, and it didn’t really change much throughout the course of the year.

  16. John Moss
    December 22, 2010

    Hopefully, the public sector pay freeze and reductions in some budgets from April will start to bite. We were always stuck with the last Govt’s spending for 2010-11.

  17. REPay
    December 23, 2010

    I am very depressed that there is still no compelling narrative about how we got into this mess and what we need to do. The average voter thinks this problem is to do with bankers. This misconceptionis reinforced by Cable’s obsessive carping about bonuses – (Did he wish he’d used his economics degree to get a banking job perhaps?)
    We are loosing bankers but we need tax. The Labour party’s view of bankers is that they are delighted to be here and paying more tax than back in the states or their own countries…they don’t really understand that brains and much of the brawn is foreign and mobile. Gordon bRown did understand you get tax revenues and borrowed heavily against the revenues. That is why our mediocre regulators were relaxed because the message was light touch. (In 2006 any middle ranking banker could and did predict the crunch…they don’t get listened to by management or media.)

    This looks like a one-term government because the public wants normal service to be resumed…it won’t be because we have exhausted credit and are going to have think, work, save and cut our way out for decades. We have hardly begun and the BBC is talking about savage cuts every hour…

  18. Lindsay McDougall
    December 23, 2010

    Regarding the horrendous leap in November public expenditure, let me quote the Telegraph business news: “The latest deterioration was driven by increased government spending on health, defence and contributions to the EU.” Quelle surprise!

    Until we start imposing cash limits on geriatric medicine and expensive drugs and phasing out the “free at the point of consumpion” health model, we will get nowhere with containing health expenditure. Between them, the body politic and the medical profession ensure that people are kept alive until they get Alzheimer’s disease – that’s senility to hoi poloi – blighting not only the patients’ lives but also those of the carers. Such behaviour is just plain crazy, in fact absolutely GAGA.

    The NHS is a nasty, Stalinist monopoly whose time has gone. Charge hospital patients just 10% of the cost of their treatment and watch the numbers of gluttons, dipsos and smokers diminish.

    Defence expenditure has blips – I’m sure that Liam Fox can assure us. If not, why not?

    As for the EU, what about all the expenditure on President Rumpy Pumpy and Baronness What’s-her-name? And their offices, and their limos and “expenses”, and their civil servants. Such expenditure is going to be compensated by reductions in EU expenditure elsewhere, is it? It’s not the way to bet.

  19. The ESSEX BOYS
    December 23, 2010

    The postings of our friendly rivals The ESSEX GIRLS on Tuesday were lucid.
    They first confirmed that the main finding from the ESSEX VOTERS VOICE research is that the PM is seen a ‘bottler’ by voters from all parties and he has since reinforced that flaw and perception by not replacing Mr Cable as Business Secretary of State.
    Later the ladies brilliantly summarised the Cable position as the news was still breaking. An unforgiveable lapse in our opinion too and shameful as several far better Conservative candidates are sitting on the sidelines, Mr Redwoood included.

    This government is losing the plot we fear and must not go on failing to grasp the EU nettle as many ills could be cured by the urgent action that the latest accounts warrant. There are many other manifesto pledges that have been defered or ignored that would show this government IS serious and that our Prime Minister is more than a friendly PR face and song & dance man bent on massaging the not inconsiderable egos of his Coalition partners.

  20. Farmer Geddon
    December 24, 2010

    Lindsay McDougall
    which conditions would you like the medical profession not to treat ? for example, hypertension, hypercholesterolaemia, osteoporosis or shall we not bother treating responsive tumours ?

Comments are closed.