With the continued debate in the financial pages that interest rates will go up, following rises in interest in China by 25 basis points to 5.81% on Saturday – the second time in just over two months, the UK is having to resort to measures to "choke off" inflation and control consumer spending. But our problem in the UK is more about survival, than exponential growth, which is the case in China.
The Government will raise VAT to 20 per cent on January 4 2011, which is feared will hit small businesses hard, and also curtail consumer spending by as much as 30 per cent according to various economic analysis. The housing market is pretty much obsolete, with no movements in many parts of the London "housing market". people are simply not moving, not upgrading to bigger homes, they are staying put, and would rather renovate their existing house, than relocate.
Fuel costs have now added an extra £1,700 per anum according to the ,for a typical family with two cars, with more increases likely with crude now $93 a barrel with freezing conditions affecting America and mainland Europe, experts predict a barrel of oil could soon pass the $100 mark.
So, add to this the looming and realistic prospect of "deep and hard" job cuts in the public sector, and budget deficit reductions that will see 20-30 per cent in central Government spending slashed from local authorities, the question how the hell do we keep the economy afloat?
If interest go up, we will see thousands of people lose their homes. If we see public sector job cuts we will see thousands of job losses, VAT rises will lead to many SME's disappear, fuel costs will drive many out of work. Any ideas Vince, Georgie boy?
The coalition were quick to address the public sector deficit, but was the UK at ever risk of default like Greece? No. Is the public sector now not the largest employer of people in the UK economy and potentially the saving grave of UK Plc? Yes. So why have the coalition gone ahead and put the fragile "economic recovery" at risk, but pushing ahead with really dangerous economic policies?
Interest rates at historically low levels, do not encourage savers, but at the same time the banks are not lending out money at historically low levels stifling the housing market, and restricting businesses to employ or expand. The coalition must force banks to start loosening the noose currently on lending, and the unfair terms imposed by banks.
Moreover The London Daily News does not want to see a return of "easy credit" or a bloated public sector, but the fragile economic recovery must not be put at risk by the Bank of England putting up interest rates to levels that will lead to catastrophe. Inflation is a very real risk, but the Chancellor must understand the economy needs consumers to spend money in the shops to maintain a certain level of liquidity in the retail sector. Record spending in shops over the last days have provided a relief to high street names who during the snow reported drops of 5-6% in share prices due to lower than expected "footfall". We must have some changes to our attitude, but we must not be scared off by economic policies that will push the British economy into a spiral of disaster.
2011 will be the hardest year in living memory for many people, the coalition if it is to survive the waves of protests that will take place must not allow dogma to blind the interest of the people and the country. The Archbishop of Canterbury Rowan Williams was correct to assert that |the lasting sense that the most prosperous have yet to shoulder their load." The rich must pay more taxes in the UK and the distribution of wealth must be equitable.
Unless the coalition walks the "fine balance" that many have spoken about, we are at risk of economic collapse like the 1980s with many thousands homeless, jobless, destitute and totally disillusioned with what the "mainstream" has to offer.
The lengths a smuggler goes to...Cocaine in powdered nuts. Marijuana in paintings. Drug smugglers are finding increasingly creative ways to hide their stashes, and some of the methods -- including yams and birthday cards -- might surprise you.
