Retail sales are falling. Covid is returning. Recession is coming. What we do not need are austerity and interest rate rises. What we do need is a Green New Deal.

Posted on

As the ONS has reported this morning UK retail sales have fallen for the fifth month in a row this morning:

I have five thoughts.

First people are already locking down again. They realise Covid is still a threat even if the government does not. This is most commonly true amongst the more elderly who buy the high ticket items that are apparently driving the decline. People know that we are in for a torrid time.

Second, people think we are heading for recession as both Danny Blanchflower and I do. They can sense it way before the government does. This observation is the 'economics of walking about' at work. As a result of their concern they are saving again, or not spending the increase in wealth they had during the Covid period.

Third, there is then no need for austerity measures from the government - the economy is already heading for a recession.

Fourth, in that case there is also no reason for an interest rate increase: the heat is already going out of the economy, and matters can only be made worse by an interest rate rise.

Fifth, we need a green stimulus in the budget in that case. I stress, not a consumer stimulus, but investment in a Green New Deal to create the jobs and long term prosperity we need because the economy as it stands now is not going to provide that.

Will the government join the evidence up in that way? I very much doubt it. It will not suit their anti-the ordinary people of the UK agenda to do so. But that is what we need.