The people of this country are at their limits. As I have already noted this week, despite supposed record numbers of people in work real and notional incomes are falling, which is not what economic theory says should happen in that situation.
And, to make matters worse, the UK population are saving less than they ever have. This data on the so-called savings ratio is from the ONS:
The reality is that people simply do not have enough left over to save. Margins have been cut to the bone. And a decline at the rate now being seen is quite extraordinary.
And this is before Brexit destroys jobs, cuts government cash flows, and increases prices because of additional costs, even if there are no additional tariffs or shortages.
We are already at breaking point. It's either that, or the employment data is bogus. I confess the latter equally plausible, although if it is that only confirms my hypothesis that we are already in a terrible economic place.
And now we wish to impose more chaos on it? Brexit is the shortest economic suicide note in history. Has a nation ever before chosen something quite so destructive?
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We already know the employment figures are false, this was established long ago. People sitting at home most of the time are regarded as being in full-time employment for the sake of political convenience, as are people endlessly writing and rewriting their CVs on government schemes. This explains our supposed lack of productivity too, the govt preferring to blame it on worker idleness rather than their own shortcomings in managing the economy. Business (or not) as usual then.
Everything you have said is spot on, hundreds and hundreds of thousands of jobless & those on zero hour contracts have the worthless task of being forced to apply for the same jobs, & even jobs that do not exist, or face having their pittance of JSA, – or ESA for those in the work-related group of disabled people – which as it happens, is the lowest rate of welfare support in all of Europe, sanctioned. People left with nothing to survive on for an average of three months, even those with learning difficulties. Hundreds of jobcentres closed, forcing many to travel up to 15 or more miles on public transport where services have been cut to the bone under this governments’ austerity drive, and if they arrive just 5 mins late, they are persecuted with what can only be described as destitution. Many do not have family or social circles to turn to for help & support. This continual ‘psychosocial conditioning’ does absolutely nothing for people apart from destroy their physical well-being. The explosion in the deterioration of the poorest & disabled peoples’ mental health has been created by this governments’ austerity policies, yet the government insist they are the party of the workers. Worthless jobs with worthless hours with worthless pay, & they continually lie to the public, by telling them they are in full time work. And after brexit?
is this basically a recession in the making do you think?
Yes
anthony says:
“….is this basically a recession in the making do you think?”
At the bottom end of the economic pile we’ve been in recession for ten years.
Money doesn’t trickle down, but a moribund economy sure as hell works its way up like rising damp. Recession is now creeping well into the realms of the middle classes.
The forthcoming crash will sink all boats except the stinking rich.
This year we have had to break into savings for the first time having ridden our luck since 2010 . Council tax rises, utility prices and pay cuts have taken their toll alongside two growing children (and that’s not their fault is it). We’ve kept debt down and tried to live within our means but it is getting harder all the time with no relief in sight.
I detect a lot of anger out here growing and ready to be manipulated by the likes of UKIP or the Tories, or the EDL and others.
A small point however that lifts the mood. The ‘nation’ did not vote for this mess. Rather, a significant portion (but not that much bigger than the other more sensible group) in our country chose to listen to lies and criminality and were basically misled.
This crime of democracy seems to go unpunished because it is so heavily embedded in the democratic process. But those of us who did not vote for this give me hope. We are not small in number.
The UK is to be set on fire and all twenty seven exits padlocked and barred. Only the richest can escape. Peace in N. Ireland will be thrown under a red bus. The NHS, denuded of EU27 staff and wounded by years of underfunding, will be top-creamed for US profiteers; new medicines will be delayed and cancer diagnosis and treatment will falter when Euratom oversight ends. In literal terms, people will die who could have survived but for Brexit.
Food and medicine supplies will suffer delays, wastage and shortfalls due to the costly new inefficiency of high friction customs and conformity checks; JIT-dependent manufacturing will rupture, inter EU hauliers will struggle to trade and survive and SME exporters will drown in red tape and admin costs. British farming will be decimated by lower quality competition. Solidly Remain-voting Scotland and N. Ireland will be incandescent with rage; the fracture of the United Kingdom is inevitable, making Britain not so Great after all.
These aren’t the heady prizes the Leave campaigns advertised when they sought our vote for Brexit. This is mis-selling on steroids. If that ‘exclusive, two-bed waterside apartment’ you signed up to is actually two mattresses in an impenetrable shed surrounded by puddles, you don’t just shrug and pay up. You shout foul and abort the deal. And when it concerns the prosperity of an entire nation, this level of criminal deceit should be bursting our lungs!
It’s career-on-the-line, speak-the-truth-time for any responsible politicians left standing.
In literal terms, people are already dying. Rates of neonatal death in the UK used to be one of the best in Europe, and are now significantly worse than most of our peers (everyone is doing better, but our rates of improvement are much worse than others).
The age-standardized mortality rate jumped 5% in Q1 2018 compared to 2017. The often quoted number is that 10,000 more people died in the first 7 weeks of 2018 than in 2017. By week 16, it was 20,000 excess deaths. Chapter and verse over here: http://www.dannydorling.org/?p=6537
Just hope you are not old, or young, or sick.
I know Danny
I trust his numbers
Richard Says:
“I know Danny
I trust his numbers”
I don’t know Danny, but I would listen carefully to what he says and be prepared to believe a great deal of what he says.
But I wouldn’t give you a pound a ream for his numbers (or anyone else’s for that matter) 🙂
“The reality is that people simply do not have enough left over to save”
And the reason for that, is this:
https://www.theguardian.com/business/live/2018/jul/20/trump-fed-criticism-currency-war-fears-yuan-uk-public-finances-business-live?page=with:block-5b51a586e4b09bbd5297a8c2#block-5b51a586e4b09bbd5297a8c2
Had I not taken on more responsibility, I would have endured 10 years of declining real wages. As it is, my different role has allowed me to just about stay at the same level.
I am not pleading poverty as I started off from an above average point, but it certainly has made things difficult.
The tragedy is that people have been persuaded that the solution is to victimize those less fortunate than themselves (people on benefits) or attack those supposedly leaching off the taxpayer (public sector workers).
Taking car manufacturing alone 856,000 people employed in the automotive industry in the UK which is 12.8% of UK exports, worth in the region of £20 billion into the UK economy, 8 out of 10 cars assembled in the UK are exported, Something like 2500 small UK companies make components for the industry 65% of which are exported to the EU. Japan has just signed the biggest trade deal in history with the EU covering 1/3rd of the worlds trade. Japanese car makers are only in the UK because it gave them access to the EU market. Toyota have been enlarging their manufacturing capability in France and Spain in readiness to leave the UK post brexit. VW is looking to Africa in readiness for brexit., they have just in time management systems so the delays at UK customs and tariffs will be enough to disrupt these systems. I can see no reason why they would stay whether we have a Labour or Conservative government.
as a pair of OAP,s who are reasonably well of we also having been drawing down on capital since interest rates were slashed to zero,even if working folk could afford to save wheres the incentive to leave funds in a bank?
but prof.surely the answer is to just print more money and then when inflation becomes too high tax inflation out of the system. What’s to worry About? Is this not your own oft declared strategy ?
Tell me why it does not work
Snail..,
If that was an attempt at sarcasm then clearly you have no idea of how monetary policy is implemented.
Through Open Market operations “Printed” money is used to buy treasuries from the banks (and sometimes public) when interest rates are cut. That “printed” or newly issued money is transmitted into the economy. When rates are raised the central bank sells treasuries drawing money in from the economy.
Those actions are also intended to influence the price (and thus yield) of treasuries but the point remains. Their actions are comparable to those you have described above. With expansionary measures newly issued money is put into the economy. With contractionary measures money is withdrawn from the economy – and all this is done according to an inflation target
The process that you described above merely applies the same basic idea, the same principle, to the fiscal realm.
Fancy that?
Neatly summed up Marco with a dose of Mr Crow for good measure.
Current polices are just stripping money (purchasing income) out of the real economy and what’s worse replacing it with very worrying levels of debt which as we know has a cycle and will end as it always does (messily as per usual).
The supply of real money needs to be replenished and re-invigorated which means that real people need to see jobs and wage rises and consequently might mean that business starts to re-invest again. And it is in my view only HM Government who can do this.
There are other things that need doing too but Marco’s basic fiscal premise is correct. And Andy is right to point that instead reinvesting in the same old ‘same old’ such as the now declining oil industry (it is running out you know) Government should be investing new green technology as well as (say) investing in reducing our reliance on diesel on the rail network.
Why or why does it seem so fucking hard these days to do the right thing?
That is the 42 question
Snailmailman says:
“but prof.surely the answer is to just print more money and then when inflation becomes too high tax inflation out of the system. What’s to worry About? Is this not your own oft declared strategy ?”
presumably toy think you are making some clever or witty satirical remark there Snailmailman, but the reality is that that is precisely what should have continued to be done post 2010. The bank bailouts which were done exactly by the means you pretend to mock, worked supremely well and we still have an international banking and finance sector.
What we didn’t have was the fiscal adjustment which would have stopped the entire asset markets casino overheating; the reforms which were necessary to stop it all happening again (which it will because only central bank money issuance will prevent it) and incentives to invest in real economy. Screamingly obviously this should have been weighted towards shifting the emphasis of our economy from oil to renewable energy sources.
It isn’t (fucking) rocket science.
While I agree with the comments made above. I don’t think Mr Snail really deserves the explanations he has been given.
A simply way of answering him is to say what he described is not a strategy; it is economic reality. As is MMT in general a description of reality not a theory. An actual strategy would say what the money would be spent on and how that would benefit our economy and society. In this instance how it would improve wages and savings. Snail is inferring like Osborne before him that balanced spending/taxation is an end in itself. But ‘balancing the books’ is an objective not an aim and certainly not a strategy and we should never accept it is.
I agree the savings rate is very unsettling. I assume it is also due to the change in pension policy whereby pensions can be cashed in. It seemed obvious to me at the time that pensioners would cash in, not to spend on luxuries but to spend on their grown up children given that real wages have not recovered since the GFC. Brexit is a great concern. If the economy grinds to a halt for regulatory reasons, government spending cannot cure this ill fast enough to prevent catastrophe. And I fear that the Tories have lost their heads and think destroying the economy, and livelihoods of UK citizens is preferable to letting Labour into power. Scary times.
Nell says:
“I agree the savings rate is very unsettling………
……..the Tories have lost their heads and think destroying the economy, and livelihoods of UK citizens is ….”
……..a price worth paying (to coin a phrase.
I wish I knew what they think it’s a price worth paying ‘for’. Just keeping Labour out of office would be easily enough achieved by running the government properly. Hell’s bells…even I would vote Tory if they could do the job they are elected to do. I’d vote for the cat on that basis.