By Michael Baxter 12 May 2010 [0 Comments | 574 views]
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Triumph for responsible politicians. There’s some really – that’s really – good news on the UK economy. What will Gordon do next? “You have Europe of the euro, Europe of the countries that understand the euro…and you have the English,” so said the boss at the French equivalent of the FSA. He reckons the UK has got problems ahead, unlike the Eurozone, of course, which is set to enjoy the good times. Then the French financial minister cast the blame on Germany for Europe’s troubles. And finally, there’s news on why we mustn’t work too hard.
UK economy welcomes UK government with best news in a very long time
Actually, the good news came in two parts. First off, the latest figures from the ONS on the UK’s industrial production indicated the fastest growth rate in eight years. Industrial production was up 2 per cent in just one month in March. Strangely, it was up by the same amount over the last year, too. Manufacturing surged by 2.3 per cent, or by 3.3 per cent on the year before. If you are surprised by the figures it means you haven’t been paying attention. For once, the ONS data was entirely consistent with the surveys from CIPS/Markit and the CBI. The lingering doubt remains that the surge may be down to a turn in the inventory cycle, as customers end their period of de-stocking, but we don’t know this for sure. The cheap pound is surely helping. After all, the CIPS/Markit index for exports reached its all-time high recently.
Of course, not all were celebrating. According to the British Retail Consortium, UK sales on the High Street fell 2.3 per cent on a like for like basis compared with last year. But isn’t that what the UK needs: less retail therapy and more production?
The second bit of good news came from the National Institute of Economic and Social Research (NIESR). It reckons the UK expanded by 0.5 per cent in the three months from February to March. The ONS recently estimated the UK expanded by 0.2 per cent in Q1, against market expectations of 0.4 to 0.5 per cent. The NIESR estimate for Q1 was in line with the recent ONS figures, but it says that it’s likely the figure will get revised upwards. It added: “We note that a further acceleration of growth is needed if progress is to be made in closing the output gap which has opened up since the start of the depression in March 2008. The recent action in the Euro Area to address the financial problems of some members suggests that policy-makers are very aware of the risks that further financial shocks might lead to a double dip and this in turn increases the prospects for a stable recovery.”
Here is a nice picture produced by NIESR showing the UK’s total output since the start of the recession, and comparing this with the recessions of 1930-34, 1973-76, 1979-83 and 1990-2003.
What will Gordon do next?
So what do you think Gordon Brown will do next? He reckons he will get on with the most important job in the world, and that’s being a husband/father. (Hey, that’s the second most important job; the most important is wife/mother – Ed’s wife.) But you know what, if GB just fathers and husbands from here on in, it will be a surprise. He may follow his best mate Tony onto the speech circuit, although, poor old Gord, he is not quite in Tony’s class for giving riveting talks. Here is a rumour, a rumour which started… err, here. How about Gordon taking up the top spot at the IMF; that’s after the current boss, Dominique Strauss-Kahn, replaces nearly headless Nick Sarkozy as president of France.
French FSA lays into UK
Talking of France, it seems detente is as lively as ever. We moan about British politicians resorting to animal behaviour when they start blaming each other, but it seems that French politicians can stoop just as low when taking pot shots at Anglo-Saxons.
The French equivalent of Lord Adair Turner, Jean-Pierre Jouyet who heads France’s financial watchdog, said yesterday: “The English are very certainly going to be targeted given the political difficulties they have. Help yourself and heaven will help you,” he said, not at all provocatively. He was moaning about the UK’s reluctance to chip into the EU’s trillion dollar bailout package. He added: “If you don’t want to show solidarity to the Eurozone, then let’s see what happens to the United Kingdom. You have Europe of the euro, Europe of the countries that understand the euro…and you have the English.” Well, how about this for understanding of the euro. If the UK had joined up with the rest of the gang, our boom would have been even more unsustainable, and right now we would be facing an even bigger crisis than Greece. Still, no doubt our new foreign secretary, William Hague, who as you know is a great advocate of the EU, will have a lot of sympathy for Monsieur Jouyet, and will be cursing Alistair Darling for being so stingy with the UK’s contribution.
Lagarde call for more German consumption
It’s your fault; no, it’s your fault, or so said Angela Merkel and Christine Lagarde yesterday. You didn’t really want to be around either of these politicians, they were hurling their dummies so hard it was positively dangerous.
Ms Lagarde, who is the French equivalent of George Osborne (meaning she also went to Eton… sorry, is the French finance minister), said the long-term fix to the EU’s instabilities “probably requires that the stability and growth pact be not only focused exclusively on the debt and deficit, but also on competitiveness – and why not consumption and a few other things?” In other words, EU stability needs Germany to spend more.
Of course she is not the first finance expert to argue for a means to formalise a method for trying to keep the international economy in balance. Keynes ventured an idea which was far reaching indeed back in 1944, in which countries with trading surpluses were virtually forced to trade with countries suffering from a deficit. His idea was good, but was rejected by the US who saw it as a backdoor method trumped up by this too clever by half Brit, to remove the UK’s debt obligation to the US. It’s a shame, because had the Keynes plan been adopted, many of the world’s crises over the last half a century, very much including the last big one, would have been avoided. Maybe the EU should dust off Keynes’s ideas and consider adopting them. Err, maybe not, the only way Ms Lagarde would agree to that idea would be if it turned out that Keynes was a Frenchman.
Ms Lagarde also made an anti-markets comment. “The trading on C.D.O.’s on Greek sovereign debt was certainly an accelerating factor,” said the Frenchwoman of finance. “When I tried to find out who was behind this, it was virtually impossible to find out who was trading and how much because it is all under the counter.” So, do you get the picture? She doesn’t like Anglo-Saxon markets. But she may have an ally in the heart of the British government. Our very own Saint Vince, the minister to be in charge of banks, could have said those very words.
Well done Clegg and Cameron
Good for the Liberal Democrats and the Tories. Shame on all those political commentators and MPs who have shown a complete failure to grasp economics. As was said here on Monday – see Kids squabble while the adults get down to business , the UK’s economic plight was such that coalition was the only possible viable answer to the UK’s hung parliament. They kept drawing parallels with 1974, and saying the most likely outcome was a Tory minority government soldiering on for a few months until it was forced to call an early election. But if such an outcome had emerged, this would have been an economic disaster on a scale that could have seen the UK relegated to Argentina status. But thankfully, those at the top of the main political parties – including, by the way, Gordon Brown – understood this.
If you watched Channel 4 news last night, you would have seen riveting television, as Gordon apparently surprised all by announcing his resignation. In fact, he was acting in the country’s interest, as were Nick Clegg, David Cameron and their negotiating teams. Just be grateful it is them, and not the media’s more voluble political commentators and destructive MPs, who rule the parties.
Don’t work too hard
According to research from the Whitehall II study, and published in the British Heart Journal, if you work more than 10 hours a day, then you are at much greater risk of a heart attack. Report author Gordon McInnes wrote: “Employees with the highest risk of coronary heart disease claimed to work 11 to 12 hours per day, a most unusual work pattern certainly in the European context…Overtime-induced work stress might contribute to a substantial proportion of cardiovascular disease.” So what should you do? Here are two tips. Tip one, if you decide you have worked 10 hours in that day, stop whatever you are doing. Tip number two… sorry time’s up.
