Monday, 16 July 2012


Today the International Monetary Fund downgraded this country's growth forecast for this year, meaning we have the weakest growth rate of the developed nations.

The IMF are predicting 0.2% growth for 2012, this will mean effectively a twelve months of recession. The IMF are cutting the prediction for 2013 by one third to 1.4%, but as the IMF has a long term record of over predicting growth in the economy, the medium term growth of the British economy is looks at the very best, flat.

In policy terms the Conservative government has no answers to the malaise in our economy, instead the chancellor spends time looking around for people and causes to blame, he is a man in power who does not like the responsibility of it.

The economy is still about 4% smaller in Gross Domestic Product than in 2007 and if the economy had grown in line with the average the economy is 12% smaller than could responsibly expected.

The only silver lining in all this is, thanks to the Labour government not entering the Eurozone at least we have control of our currency, this gives us flexibility that struggling eurozone countries does not.

The problem in the economy is that well paid full time jobs are not available, with short time flexible jobs keeping unemployment levels down, but this is not giving confidence in the economy.

So Austerity is working, Cuts in benefits and tax credits, cuts in public sector spending has choked off construction, 40% of the construction industry is reliant on the public sector, public sector workers are being made redundant, increases in taxes has also damaged disposal incomes, fuel costs keep rising and as food also costs more, wages are at best stagnant, with companies taking profits rather than awarding pay rises.

With all this happening, tax receipts are not going to recover, this means the government will not meet it's targets and we know George Osbourne will borrow at least £158 billion more than he said.

The government needs to do more, it needs temporary tax cuts to boost spending, it needs to invest in affordable housing giving a boost to construction and infastucture and it needs to develop an industrial strategy with a government investment bank (called RBS).

The time has come for the hand washing to stop and the government working for the millions not the millionaires.

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