The latest organisation to utter assurances that our economy is out of intensive care is the BCC– the British Chambers of Commerce, They are of course another lobbying group – on behalf of businesses this time, so they have some sort of axe to grind don’t they? They are predicting that our economy will optimistically grow an extra 0.1% this year than they had expected (to 3.2%), and more than they had said, next year as well (but nevertheless lower). [Are any of these crystal ball gazers worth bothering with? The UK official (OBR) guess was 2.7%; the IMF said 2.4% (up from 1.9% in only three months!); the BoE forecasts 3.5% (up 0.1%).
No doubt Chancellor Osborne will seize on this BCC’s crumb of comfort as further proof that his Plan A worked. Before he does so though, he should beware the sting in the tail surely? EXPORTS – the UK’s Achilles heel no less? We are on a down escalator when it comes to our share of world trade aren’t we? This group has halved their export growth expectation – to only a third of that predicted by the BoE. They claim also that the Chancellor’s exports growth target of doubling them in eight years will be missed by a mile – oh dear. Other governments invest heavily in supporting their exports (like export active Germany), but we’re not are we?
As a so called ‘trading nation’ we don’t make money by importing stuff (and we import an unbelievable amount including forty percent of our food for goodness sake!); we have to export more goods & services if our economy is to expand, and that is obvious isn’t it? But it isn’t happening is it? At a period of time when workers wages have stagnated, meaning that our costs are down (the lowest manufacturing costs now in Western Europe!), we still are failing to export despite the fact that many products are price sensitive in the world markets. Much is made in the debate about Europe in that the EU is Britain’s critical market place – but that market is in the doldrums isn’t it (with GDP stagnating and the very survival of the euro seriously still in question)? There is a saying “Export or Die” and our trade performance shows we are dying aren’t we? Banks need to be lending money to businesses to invest and that’s not happening either is it? Our businesses want to sit back & relax – too lazy to export and too cowardly to invest. Our so called growth is based on a foundation of straw – not manufacturing & exports but consumer spending on borrowed money, and the artificially high escalation of house prices – fuelled by the Governments extra funding arrangements.
Any boy scout or girl guide who has tried to start a cooking fire will tell you that it is a precarious job. When you have a small flame amongst your kindling material it has to be nurtured – don’t blow enough or blow too hard and the flame is out! As the flame gains strength though, you have to gradually add more combustible material, getting progressively larger until the fire is strong, when even logs can be added to give off the heat you are seeking – then and only then, can you cook.
So what has happened to our British economy then? It was dragged under, and the fire extinguished, by the global financial crisis brought on by the Banks & Financial Institutions in 2007. The fire was just rekindled when the Coalition Government took over in 2010 – they smothered it by doing too much too quickly to repair the economy (a bizarre & failed attempt to do it in five years no less). The out of work have now taken low paid or part-time jobs meaning that they don’t earn a living wage so still claim State benefits to survive. After three years and the longest recession in British history, the flame was regenerated last year and hope appeared at last for a new fire. Despite the drastic cuts in big project spending that would have provided fuel for our fire, the Country will end up next year in greater debt (some fifty percent greater) than in 2010. That’s austerity for you.
[Without a substantial & immediate growth in EXPORTS there will be no fuel to sustain the fire will there? And that’s not going to happen is it?]