Friday, 28 January 2011

The Forces of Stagnation

The latest consumer confidence index shows an ever worsening mood of the British people. The Index sees confidence at levels back not seen since 1994. Families have decided to reduce spending on the basis of the certain times and this indicates that household finances has deteriorated since the end of last year. The recent VAT increase, higher inflation and squeezed incomes mean that households are struggling to make ends meet.

With consumer confidence low, unemployment growing and likely to rise further and with other tax rises and spending cuts this year, debt levels look to increase. On top of this, the weakness of the housing market is not good news for consumer spending.

Even high performing retailers like John Lewis are feeling the strain of lack of spending,
" John Lewis figures suggest that consumers are becoming increasingly less prepared, or less able, to spend as higher inflation and muted earnings growth squeezes their purchasing power."
Despite this, the coalition government are planning to make workers less secure at work, implementing new employment rules, that will give employers two years before unfair dismissals could be pursued, reversing the Labour government change from one year.

Employment tribunals will now insist that employees will have to pay up to £500 before they can take their employers to an employment tribunal.

PM David Cameron claimed the current laws were “too costly” and acted as a “barrier to growth”, this shows that David Cameron believes workers should be treated as employers wish and have few working rights.

The Business and Skills department have produced an employers’ charter which the Unite union believes gives employers "a green light to bully and intimidate, It even encourages employers to sack staff ".

In one of the gloomiest weeks for the economy this year we've heard nothing from the government about creating jobs. We only hear about the need for cuts and harassing people out of work.

This increasingly right wing government believes only unfettered markets can produce growth, this includes cutting university places, training schemes and the Education Maintenance Allowance.

As has already been said this week, the Conservative led government has no vision for the economy, 2011 is looking increasingly difficult for families, unsurprisingly these families will spend less as inflation rises to 5%, the government cutting £20billion this year will further depress spending, it's looking grim, with the coalition government being the true forces of stagnation.

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