Thursday, 18 August 2011

Falling off a cliff

Today's retail sales data confirmed how weak the British economy has become, with experts expecting the country to slip back into recession.

Retail sales showed meagre growth last month as cash-strapped consumers cut back spending despite summer sale discounts. According to the Office for National Statistics, sales volumes grew by 0.2% in July from the previous month, leaving sales unchanged from last year's level. The City had expected 0.3% monthly and annual gains, as retailers slashed prices aggressively.

This is no surprise as Chris Williamson, chief economist at Markit, said: "Such weak spending is no real surprise. People are worried about job security, and incomes are being squeezed by higher prices. After inflation, real take-home pay is falling by over 2% per annum. Concerns about the economic outlook are also causing shoppers to hold back on making big-ticket purchases."

Nick Beecroft, senior markets consultant at Saxo Bank, was even gloomier. "If anything, the data just serves to confirm the general picture of an economy which can be described as, at best, moribund, but may well look like it's falling off a cliff by the time we see August's figures."

Today also saw a 4.5% fall in the FTSE continuing the falls of the recent period unsurprising as every piece of economic data that has come out recently has been weaker than expected.

Yesterdays British labour market data showed broad-based weakness, with slowing employment, rising unemployment, falling hours, falling vacancies and rising redundancies. Further significant increases in unemployment probably lie ahead for coming months.

Young people unemployment rate is 20.2% with nearly 1million 18-24 year olds out of work and unemployment for women is at it's highest level since 1988 at 1.05million.

The government has no real plan to resolve the economic difficulties, they hoped was for an export led recovery, this depended on the strength of foreign markets, now with the eurozone crisis and the US budget problems, this hope is in tatters. They're dogmatic view of not having a plan b, is likely to see years of no/very low growth and economic hardship.

Wednesday, 17 August 2011

The Truth

In the aftermath of the Hillsborough tradedy in 1989, A News International title published the headline "The Truth", this publication printed lies about Liverpool football supporters, in defence of a disgraceful policing operation.

The then Prime minister and Home secretary repeated many of the misrepresentations made against Liverpool supporters and generally against football fans.

The excellent Taylor report uncovered many of the failings of the police, in terms of planning and operationally, it was their failings that caused 96 liverpool FC fans to lose their lives.

The Last Labour government finally agreed to release paperwork to allow the families of the dead to understand why their love ones died.

Two years ago the BBC applied for government papers to be released that would show the involvement of Mrs Thatcher and Douglas Hurd in the aftermath of the tradegy. Christopher Graham the information commissioner was happy to release these documents, he rejected the argument that the disclosure would impact negatively on the freedom with which ministers can engage in "free and frank discussions", and on the convention of collective responsibility.

"In this case there had been multiple changes in government between the time the information was recorded and the date of the request," Graham said. "Also, the subject matter of the discussions recorded within the information in question centred on a very particular set of circumstances that were no longer current at the time of the request.

"As a result the view of the Commissioner is that the argument in favour of maintenance of the exemption relating to convention of collective Cabinet responsibility is not a factor of significant weight in favour of maintenance of the exemption."

He also said the passage of time since the information was recorded was a key factor.

"This information was 20 years old at the time of the request and, as the complainant has noted, the current Government is implementing a reduction of the current 30-year period before Government papers are released to 20 years," he said.

He therefore recognised "that there is a diminishing case for withholding information over 20 years old".

The Government’s view is that it is in the public interest for the process that is underway through the Hillsborough Independent Panel be allowed to take its course.

“The terms of reference for that process includes the intention to disclose information to the Hillsborough families first.

“The Cabinet Office absolutely agrees with the principle of providing information to families about the Hillsborough stadium disaster, but we believe it is important that any release of information should be managed through the Panel’s processes and in line with their terms of reference.

Today the Conservative government has appealed Christopher Graham decision saying
The Government’s view is that it is in the public interest for the process that is underway through the Hillsborough Independent Panel be allowed to take its course.

“The terms of reference for that process includes the intention to disclose information to the Hillsborough families first.

“The Cabinet Office absolutely agrees with the principle of providing information to families about the Hillsborough stadium disaster, but we believe it is important that any release of information should be managed through the Panel’s processes and in line with their terms of reference.

The greatest disinfectant is openness and transparency.

It's time people know what our elected leaders knew, what they were doing, twenty two years on, there are no national security issues here, only the reputations of Conservative leaders, it's time for the Truth.

We know News International closed a tabloid because of endemic wrong doing, we know the same paper had close links with the police and politicians.

The British establishment is great at closing ranks, we know the tabloid lied about Liverpool supporters, we know the police tried to covered up their incompetence, it's time for the British state to publish everything on this disaster and let us learn the lessons for the 96.

Tuesday, 16 August 2011

There is no ‘them’ and ‘us’ – there is us.

The inflationary pressures continue, we have seen the utilities bills continue to rise, today the hike in train fares, with fares 28% higher than today by 2015.

The UK’s rate of inflation increased from 4.2% in June to 4.4% in July according to figures released today by the Office for National Statistics.

The latest increase in inflation will add to pressures on household budgets. Moreover, with inflation likely to increase to 5% in the next few months, the gap between increases in earnings and increases in prices could widen.

This makes it very unlikely that the pace of economic growth will pick up in the second half of the year. Retail sales volumes, which have barely increased over the last year, are likely to remain stagnant.

So the government does nothing to help with ever rising fuel prices, nothing on ever higher transport costs.

So them (the government and energy companies and train companies) and us (who have to pay).

This week we are expecting data on unemployment, we are expecting weak private sector employment with possible future rises in unemployment.

This will further reduce confidence.

Ed Balls said of the chancellor;
"He needs to realise that tax rises and cuts which go too far and too fast have crushed confidence and seen our economy flatline since last autumn. His reckless and incautious policies have left Britain vulnerable in the face of the global economic problems we are now seeing. And without strong growth and more people in work the government will find it much harder to get the deficit down."

The new IMF boss Christine Lagarde's attacks Osbornomics and is damning "For the advanced economies, there is an unmistakable need to restore fiscal sustainability through credible consolidation plans. At the same time we know that slamming on the brakes too quickly will hurt the recovery and worsen job prospects. So fiscal adjustment must resolve the conundrum of being neither too fast nor too slow... What is needed is a dual focus on medium-term consolidation and short-term support for growth and jobs.

That may sound contradictory, but the two are mutually reinforcing. Decisions on future consolidation, tackling the issues that will bring sustained fiscal improvement, create space in the near term for policies that support growth and jobs. By the same token, support for growth in the near term is vital to the credibility of any agreement on consolidation. After all, who will believe that commitments to cuts are going to survive a lengthy stagnation with prolonged high unemployment and social dissatisfaction?"

With low growth it is likely the government will miss it's borrowing target despite cuts to the public sector the country borrowing will not decrease and could even increase, so Osbournomics will demand even greater cuts to public services.

This will continue the cycle of public sector austerity, then private sector austerity and then lower consumer confidence, a stagnating economy.

Monday, 1 August 2011

Manufacturing activity falls

The Guardian newspaper are reporting Britain's manufacturing sector has suffered its first contraction in two years, fuelling fears that the UK economy is stumbling.

The detailed figures for the PMI showed that output grew slightly among Britain's manufacturers, while new orders and employment levels were down. Input prices grew at a slower pace, due to price reductions in plastics and steel.

Howard Archer, chief UK and European economist at IHS Global Insight, said this was a "pretty horrible survey".

"It is not just the fact that the headline figure showed overall manufacturing activity contracting for the first time in two years in July, but also that the more forward-looking elements of the survey point to further softness ahead – most notably new orders contracting for a third month running in July and at the fastest rate since May 2009. This was due to contracting domestic demand as export orders actually picked up although they remained well below the growth rates seen up until the first quarter of 2011."

These figures are further evidence the British economy has not responded to the CONDEMs Austerity packages, the Chancellor Osbourne promised the private sector would take the slack of public sector job loses.

It would appear private business is now making employment reductions, growth in the UK over the previous two quarters - the final of 2010 and the first of 2011 - put us fifth from the bottom among EU countries, beating only Ireland, Denmark, Portugal and Greece. The weak growth in the latest quarter will not lift us up these rankings. Manufacturers indicate there will be no short term bounce to growth as orders seem to be soft in the coming period.

This seems to me a case of history repeating, youth unemployment around 1million we are in danger of another lost generation in the labour market, the CONDEM government have cut by 85% help to keep young people in education through the EMA, they have scrapped the Future Jobs Fund, it's easy to cut, now the CONDEMs have to help the young into work.

The CONDEMs need to discover a growth plan, they need to stop playing politics, talking rubbish about sovereign debt and frightening people, the cycle of cutting will only continue until a strategy to grow the economy and the return of confidence, I fear the CONDEMs political narrative is more important to them then admitting to the need for plan B.