Friday, 25 February 2011

No Strategy for Growth

Today the office for National Statistics published the revised growth figures for the final quarter of last year, with growth revised lower to - 0.6%, with the private sector shrinking by 0.7%.
The Construction sector shrank by 2.5% and a 2.5% slump in business investment also contributed to the overall decline.

In terms of Consumer confidence the picture remains at rock bottom this highlighted concerns among consumers about the effects of the government's spending cuts and falling real incomes.

Anyone in work knows that we are working longer and expected to work overtime for no extra income, wages as a proportion of Gross Domestic Product (GDP), has fallen from 64% in 1975 to 54% in 2010, with the governor of the Bank of England stating average wages are likely to be no higher in 2011 than they were in 2005.

This may partly be explained by the fact that between mid-2009 and early 2010, 89% of all new income had gone to profits. In truth, £29bn (this year) is only a fraction of the total surplus that is being extracted from workers.

Productivity has virtually doubled, today a worker does in 23 hours what it took them in forty hours in 1975.

This governments solution is to introduce more flexibility into the Labour Market, with fewer protections for workers and making it harder to fight unfair dismal, further strengthening the hand of employers.

This diet of public sector cuts, VAT increases, benefit cuts and squeezed income and increased food and utility bills are crushing consumer confidence.

This cycle needs to be broken or a Plan B, the market is not working so growth can only be fostered with a set of strategic government interventions.

We need an investment bank to develop infrastructure projects, since the RDAs has been disbanded and the Local Enterprise Partnerships has not been formed in Somerset, we has no strategic regeneration body; more spent on research and development and training; developing manufacturing.

The economy needs confidence, a conservative state of economic fear will not build that growing economy.

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