Why does no one have any real proposals to boost growth?

It is getting nasty out there. After a brief flirtation with recovery, it is now more clear than ever that the next few years will be something of a slog for the UK. 

National Statistics numbers just out show that real (inflation-adjusted) expenditure by families in the UK fell 0.7% in the first four months of this year. Spending on clothing and footwear were among the hardest-hit areas – down 7.7% year on year.

This should hardly come as much of a surprise, given the financial crisis and the credit drought it has left us with. But it does explain the carnage we are seeing on the UK’s high streets. Administrators have been called in everywhere from Jane Norman and Habitat to HomeForm (owners of Moben Kitchens and Dolphin Bathrooms), and the rest of the retail world is desperately trying to avoid the same fate: London’s Evening Standard reports that the summer sales are underway even earlier than usual while several big name retailers are working to protect themselves by closing stores before they get closed. Thorntons is to shut at least 120 shops in the next three years and lose 750 staff in the process.

“There is something a bit unpleasant going on out there,” the Standard quotes leisure analyst Mark Brumby of Langton Capital as saying. Everyone is discounting to get sales. But non-stop discounting at a time when costs are rising fast isn’t sustainable. Instead, it “could easily lead to more collapses.”
 
For years, retailers have worked in an environment of rising spending and rising sales, one in which consumers have been egged on by falling prices. Now, with real wages falling and fear gripping the wallets of the nation, that environment has gone. Today they are competing for fewer pounds in the pockets of fewer people, and if they are weak, odds are they will go under relatively quickly.

Those in any doubt that Britons aren’t in a buying mood might note a few numbers from GFC Economics. It seems that in real terms (i.e. adjusted by the consumption deflator), employee compensation fell 4.0% y/y in in the first quarter of 2011. That compares with an average fall of 1.2% y/y in 2010 and it surpasses the worst numbers of the 1980s. That’s not good.
 
The hope of course is that the UK economy somehow manages to rebalance away from consumption and public sector largesse back towards more in the way of sustainable manufacturing and exporting. But while we have made a start on this (manufacturing and exports have risen and private sector employment is doing fine) it isn’t going to be a short job. You can see all the weak economic data out today alone here.

All this is, I think, I hope, now universally recognised. What isn’t is a solution of any kind. We hear endless gripes about the state of the economy but no useful suggestions as to how we might help it grow a little, growth being the best possible way for us to escape from our current fix.

 

Take this piece by Chuka Umunna. In it he sums up very well the problems facing small and medium size companies (SMEs) but he doesn’t actually suggest any concrete measures that either his party or the other could suggest to make things better. He wants less red tape and more support for the sector but we all want that. And he doesn’t tell us how we get there.

There is always the chance that we now won’t grow again for a few hundred years (as I suggest in Is there a limit to economic growth). And it is also true that you can’t force growth, just provide a good environment for companies to operate in and hope for the best.

But still the dearth in suggestions is odd. It would seem to me for starters that if we really want to increase lending to SMEs we should find a way to postpone the rise in capital requirements for banks. This would mean they have more capital to lend to SMEs. That they don’t have the capital to do so is one of the main reasons they are hanging back from lending at the moment. And part of the reason why the rates at which they do lend are so high.

It wouldn’t be popular with another banking crisis looming but it might help a little. Anyone else got any ideas? They have to be specific and immediately doable.

94 Responses

  1. 29/06/2011, Nigel wrote

    How about turning NS&I into a lending vehicle for SMEs, Bypassing the banks, while they adjust their capital requirements.

  2. 29/06/2011, Merryn wrote

    One from a clever reader: Get rid of quarter days and have rent paid every month in commercial market just as in retail market. Would improve the cash flow of many businesses hugely.

  3. 29/06/2011, Romford Dave wrote

    A more unpopular but radical solution would be to let them fail, bringing forward the day when everyone finally understands what a great correction is.

    Prevarication raises expectation and has led to where we are now.

    Great expectations with precious little chance of realisation.

  4. 29/06/2011, Roland wrote

    In my opinion real growth takes time as well as a stable economic and political environment. I don’t think growth can be bought with cheap money, we are being too impatient. However humans will *never* stop striving to take the next step and so any country that provides such an environment for growth for a sustained period will achieve it. For this reason I don’t buy for a second the idea that growth has ended. It may well be less measurable in terms of atoms going forward than it has been for the last few centuries and no question that the increasing cost of energy may effect the rate of growth.

  5. 30/06/2011, Steve wrote

    Reduce taxes considerably and let small businesses flourish. It may seem counter-intuitive, but this is how Hong Kong has managed to suceed so well in the past couple of decades. Hong Kong has no sales tax, no capital gains tax, no VAT and plans in the pipeline to phase out stamp duties. Income tax is set at 2% for those earning less than HK$35,000 a year, 8% for HK$35,000-HK$70,000, 14% for HK$70,000-HK$105,000 and 20% for anything exceeding that. And it has growth.

  6. 30/06/2011, Merryn wrote

    One from Ian King writing in today’s Times. Follow Ireland’s example and cut the VAT on the tourism sector. The Olympics are a “once in a life time opportunity to showcase Britain.” The government should offer “more of a helping hand.”

  7. 30/06/2011, Notts Oxon Will wrote

    Weak demand is being hammered by cuts in spending increases in taxes, commodity speculation and the Libya crisis, once in a double century reductions in living standards, capital ratios are the least of banks concerns, they will lend to anyone with a good credit record if demand and the economy are growing.

    Cut VAT to 10% and significantly decrease Jobs taxes national insurance and earned incomes.

    Once the economy is growing healthily with private sector incomes supported to pay off private sector debt and increase saving the deficit will look after itself.

    Cut and suck the money lifeblood out of the economy and it will be more anaemic with lower sales, production, incomes, taxes and higher welfare spending causing a bad deficit.

  8. 30/06/2011, Notts Oxon Will wrote

    Merryn, in the US people pay incomes and mortgages fortnightly. This increases/spreads the payments to 26 a year and cuts interest on a mortgage massively.

  9. 30/06/2011, alex wrote

    The problem is Merryn alot of things which would actually encourage small businesses to start and expand go totally against the grain of European legisaltion and would be deeply unpopular….scrapping comulsory maternity & paternity leave for small businesses for example, removing the layers of licensing and permits that are now required for almost every activity, and some way or other severely curtailing the UKs compensation culture to discourage often spurious legal claims.

    And finally real tax advantages to those running there own buisness, if someone is willing to take the risk of being self employed and emplying others then at least reward them with substantial tax breaks for doing to to give others genuine reason to follow suit.

  10. 30/06/2011, Dean Hallett wrote

    Savers can’t get decent interest rates, companies can’t borrow money – hmm, anyone see an opportunity here? Seems like the banks have the system so tied up in their own interest that common sense and normal supply and demand can’t get a look in.

  11. 30/06/2011, Thomas wrote

    Here is my idea

    Offer all public sector workers a choice – either accept a 5% cut in pensions or get the full pension but with 10% of the pension “at risk”. Use this “at risk” cash to set-up a huge UK sovereign wealth fund which will principally invest in start-up UK businesses, helping to reduce unemployment from ex-state employees.

    If the fund is a success the public sector can also share in this success via higher pensions funded by strong returns. Crucially the public sector would be incentivised to cooperate with and help the private sector firms become more successful e.g. by cutting red tape.

    As a nation our only hope is if the public and private sector actually work together as setting one group against the other is ultimately a massive waste of resources.

  12. 30/06/2011, Chester wrote

    Reducing tax , state largess and red tape is essential. But the real question to ask is what proportion of state to private spending generates sustainable growth, not fuelled by perverse incentives or unsustainable borrowing

    If it is true that growth reduces by 1.5% for every 10% of GDP consumed by the public sector, western economies cannot compete for growth rates of 5 – 6% until state spending is cut to 15%. That is the basis of growth in HK and other sustainable economies, and the reason why tinkering with budget deficits will not solve the growth issue

    Rebalancing an economy to this extent will take decades, but must start with an understanding of the underlying problem, which is not being addressed

  13. 30/06/2011, Chester wrote

    Reducing tax , state largess and red tape is essential. But the real question to ask is what proportion of state to private spending generates sustainable growth, not fuelled by perverse incentives or unsustainable borrowing

    If it is true that growth reduces by 1.5% for every 10% of GDP consumed by the public sector, western economies cannot compete for growth rates of 5 – 6% until state spending is cut to 15%. That is the basis of growth in HK and other sustainable economies, and the reason why tinkering with budget deficits will not solve the growth issue

    Rebalancing an economy to this extent will take decades, but must start with an understanding of the underlying problem, which is not being addressed

  14. 30/06/2011, philip davies wrote

    Sack Mervin King he cannot see a bus coming until it runs him over.

    Increase personal allowances to a point say 60% of the average wage. This will increase disposable income that will work its way back through the bank balance sheets and increase disposable income. The indirect tax system will suck most of this back, it will be made worth your while to seek gainful employment and will substancially reduce the welfare bill. Otherwise the law of decreasing returns will start to take effect on the tax take

    Increase interest rates to a level it is worth saving before the inflation takes a particularly nasty hold on the economy. This will improve bank balance sheets and increase the value of the pound and reduce the cost of imports.

    History will show Berneke and King are the biggest disaster in economic management since 1929.

  15. 30/06/2011, Paul Danon wrote

    Anyone striking in the public service should be dismissed. The minimum wage should be abolished and manufacturing startups should be encouraged.

  16. 30/06/2011, Albee wrote

    Glasgow Media Group suggested a one off tax of 20% on all those with assets (property collateral, pension funds etc) would clear the national debt at a stroke, then we could start to rebuild the economy – clear of debt.

  17. 30/06/2011, Albee wrote

    Tax capital – not income to clear the national debt ie a one off tax on all with assets(housing / pension pots etc) of over £1m, as promoted by Glasgow Media Group. Then we can rebuild the enterpise economy free fro debt burden.

  18. 30/06/2011, Merryn wrote

    @Albee, If you break the contract between wealth creator and government like that there will be no one left in the UK to do the rebuilding.

  19. 30/06/2011, Merryn wrote

    A good piece from the FT on why a Plan B is most definitely not the answer. http://www.ft.com/cms/s/0/81c47b4c-979b-11e0-9c37-00144feab49a.html#axzz1QYqQFxik

  20. 30/06/2011, Tom wrote

    What about the service sector?

    Outside of the service sector that is based purely on consumption, there are numerous UK service companies doing rather well off the back of foreign demand from Europe and the Emerging Markets

    The UK is still the world leader in certain service related design, legal, engineering fields.

  21. 30/06/2011, Kuroneko wrote

    Cut income and corporation tax and redress fiscal drag.

    Tax unproductive wealth instead. Introduce progressive taxes on all land, houses etc (ie annual tax on any property owned not just tax on capital gains or inheritance tax).

    Reduce welfare spending and increase infrastructure spending.

  22. 30/06/2011, Richard Calhoun wrote

    If we want growth, a competitive economy and Companies that are able to compete globally then we need to tackle the Welfare State.

    We in the UK, and the Western economies, will not be able to compete in the World economy whilst we are encumbered by the massive costs of the Welfare State.

    Anything other than tackling this monster is playing at it, we must take the following actions to reduce growth:
    1/ Radically reduce the welfare state to cater only for destitute n very poor.
    2/Introduce a flat tax n reduce benefits accordingly
    3/Get rid of the compensation culture
    4/ Leave the EU to enable the above to be enacted.

  23. 30/06/2011, Tim. W wrote

    OK Merryn. My Idea – re-establish the relief for tax on dividends within pension funds. However initially, for the first phase, limit this relief exclusively to UK banking shares. This move would allow the banking sector to attract money from the markets and thus aid recapitalisation, making increased lending to SMEs a little more likely. (Though to channel money in this direction would still require banking regulation).

    Making banking shares much more attractive to pension funds would have the added benefit of supporting their price and hence assist the longed for re-privatisation of the government’s holding. Though hopefully not through the Clegg method!

    I know banks aren’t necessarily the most grateful recipients of support like this, but you can’t train a bad dog by beating it.

  24. 30/06/2011, Bryan wrote

    Some really good and intelligent ideas on here (apart from those by Albee). Its a shame our politicians aren’t as smart. We have possibly the most inept group of people in power (and in opposition) that this country has ever had. Where are the people of vision and authority these days?

  25. 30/06/2011, Merryn wrote

    Two suggestions from Twitter followers, both in line with the general trend of your thoughts

    1) Radical reduction of welfare state,intro a flat tax.end compensation culture,privatise all state assets and leave EU
    2) Transfer tax burden off labour and onto economic rent.

  26. 30/06/2011, Andy wrote

    Fix the leaks and creaks. Let me run HMRC (or anyone who has any private sector experience) tax collections would go up without raising tax rates and costs would go down.

    Extend and modify the flat rate VAT scheme for small businesses to simplify collection and calculation and reduce fraud.

    Ditch the state pension Ponzi scheme joke (NI) and raise Income tax to cover SOME of the difference.

    Remove all tax credits etc and increase allowances.

    Definitely ditch quarter days, archaic and irritating.

    Clamp down on the black economy.

    Or buy a magic 8 ball for all future decisions by BoE and HM Government, I’ll take my chances that the outcome is better

  27. 30/06/2011, Nick Lidington wrote

    I run an electronics design and manufacture SME here in Reading and have seen a 31% growth in 2010 over 2009 and can see another 25%+ in 2011 over 2010 to £6M T/O. Design and manufacturing does pay in the UK but it is no thanks to the government. We export some of our unique technology to Africa for Aids and other disease analysis and communication. No amount of talking with DFID will get them to re-consider the £500M per year aid they give direct to Africa to re-deploying some of it to create jobs here in the UK to help companies like us to gear up and produce more of our unique technology and export more to Africa to directly help the paying Clinton Foundation. Currently we cannot design and manufacture fast enough for these customers. Where did letting ‘charity-begin-at-home’ go? Is the government really committed to getting down to the hard decisions of making design and manufacturing work like Sequoia Technology and others have had to do from their own limited resources?

  28. 30/06/2011, Harry High Pants wrote

    People are pushing the tax agenda. But what about removing burdensome regulation. It costs nothing and frees up SME capital to pay for product development and salesmen etc. It’s an easy win if you have the political will.

    What happened to the govt activity to do this. It seems to have disappeared.

    Starting a business is a big leap. The more barriers we place the less people will go for it.

  29. 30/06/2011, Alec wrote

    Reduce personal taxation by 50% and increase interest rates to 7%.
    That will mean savers will start spending again and boost the economy. One more thing, sack Mervyn King and his hopeless monetary policy committee.

  30. 30/06/2011, Mike Fitzsimons wrote

    Economics is 50% science and 50% ‘witchcraft’. Solutions based on ‘rational economic’ argument alone rarely work. The problem with ‘them and us’ arguments are that they lead to oscillations in policy and unproductive change, often cloaked in ‘efficiency saving’ or other clichés that serve one point of view. Growth occurs when productive investment is made in an economic sector (public or private), that utilises innovation, and provides the best return (however measured). It does not occur when the investment fails, which is what has just happened worldwide. Cuts never work in the long term as they have no up-side of growth generation. Investment in productive programmes does work in all sectors. And of course having said that here is one of my favourite quotes about economics. From LBJ (US President (1963-69).”Did you ever think that making a speech on economics is a lot like peeing down your leg? It seems hot to you, but it never does to anyone else

  31. 30/06/2011, Clericus wrote

    Reduce taxes. (Flat taxes preferably)
    Slash government spending.
    Make it mandatory that government cannot spend more than it takes in taxes.

    Simples!!

  32. 30/06/2011, Critic Al Rick wrote

    Surely there are economic priorities above so-called Growth; how about:

    1) the public as a whole adapting to live within its means

    2) the encouragement of the turning of a horrendous Balance of Payments (with overseas) Deficit into a healthy Balance of Payments surplus

    3) the country ridding itself of the burden of ‘parasites’ (rich, poor and intermediate)

    Until the govt debt is brought down to sensible levels and UKplc is a profitable enterprise (as judged by Balance of Payments), so-called Growth is essentially economically meaningless.

  33. 30/06/2011, JAW wrote

    Jane Norman, Habitat, HomeForm, Moben Kitchens, Dolphin Bathrooms, and Thorntons etc were probably all viable companies making moderate profits but who could not pay the enormous rents demanded by their commercial landlords. Long term solution… discourage and phaze out all commercial landlords. Owner-occupiers less frequently go bust.

    Short-term solution: Create enterprise parks everywhere with zero planning regulations except environmental pollution. Offer plots to businesses with zero rent, zero business rates and zero employers national insurance, and 10% corporation tax for 25 years. Those companies still surviving in 25 years time to be gifted the land.

    There are many who want to create wealth but cannot start because of high rents, high business rates, shortage of premises, planners negativity, nanny state control-freak interference and onerous employment laws. Time for Liberation.

  34. 01/07/2011, Kerome wrote

    Some of the suggestions I’d approve: reducing all rents, shifting tax burdens from small to medium+ businesses, taxing assets (within limits), streamline tax and regulatory systems.

    But the main thing I feel we should do is invest in entrepreneurs. If you look at all the ways to directly stimulate the economy, the one that gears the highest is encouraging people to set up new businesses – you need to create more wealth-generating sources, not just feed cash into existing enterprises. I’d like to see a government-funded UK development bank take on that role in the current risk-averse climate.

  35. 01/07/2011, Camelot36 wrote

    Anounce that savings from reduction in government spending will not be used to reduce debt for the next ten years and increase the savings. Make net savings every year for ten years aiming for 32% of GDP.
    Match the savings by company and personal taxation each year with the aim of reducing company raxation to 15%.
    The emediate boost to confidence within UK would add to growth……..or is this too simple.

  36. 01/07/2011, Chris wrote

    @ Albee. As has pretty much been said the problem with that argument is that people really need to know the things they have worked for are secure (whether levels of remuneration are always ‘fair’ or not). Taxing retrospectively like that undermines private ownership and as a result people would be dis-incentivised to save and to work to earn things. i.e. someone who has worked hard to build something gains nothing on someone who has not, why work hard on something that could just be taken from you? It would be great if we could be motivated just by intrinsic satisfaction but I think that would be difficult for a lot of things to say the least.
    If everyone would voluntarily be willing to give up say, 1% of their assets to contribute to paying off the national debt, that could help. But everyone would have to agree to it which I don’t think would be likely to happen.

  37. 01/07/2011, Chris wrote

    Lots of interesting ideas here. While there may be a lot of things that could be implemented quickly to good effect it’s probably stating the obvious to say I don’t think there can really be any ‘silver bullets’ to such a big undertaking. I thought Chuka Umunna’s article about SME’s was pretty good though personally.
    For me I think it is often difficult to make ‘one size fits all’ policies, so I am a fan of de-centralisation. But for that there needs to be the necessary skills in communities for them to run their own affairs, so that also requires good education (into say political philosophy and finance, as well as the other core subjects). I think education should be as accessible as possible to the best standard possible to all, as I think developing peoples potential so people are doing what they are best it will benefit the country overall. Then you need a good culture, and taxes at a level and structured to invest in education etc. but to also encourage private enterprise.

  38. 01/07/2011, Kieran wrote

    I suggest a waste of time tax!

    Any internet bandwidth transiting to twitter, facebook, google+ etc etc accrues an extra charge.

    That should boost tax receipts and increase economic output at the same time!.

    It wouldn’t be too hard to do either. Something similar to a quality of service protocol would work, for PAYG customers.

    And a simple firewall “flat fee” access cost add on for the pay monthly model.

  39. 01/07/2011, Realist wrote

    Find another Saudi Arabia with 10 m barrels of oil per day of cheap light crude.This did wonders for global industrial growth in the past.Probably because it is the equivalent of 750 nuclear power stations.
    Many of the previous posts indicate people have little real idea of what is needed for “growth”.

  40. 02/07/2011, Paul wrote

    Imagine, instead of cutting the bloated benefits budget, that pays the British not to work, they are now actually cutting the aid to the handicapped!

    What ever happened to common sense in this country?

  41. 02/07/2011, Glenn wrote

    stop paying benefits to people with more than 2 kids.. if they want more, they should support them, not us. reduce the tax burden on small business- its there that growth comes from.. even microsoft was once small.. employ british workers- train them to have a better attitude, and to be less greedy, and reasonable expectations so they wont sit on benefits, and reduce immigration. reduce people coming here to sit on benefit- ensure they can support themselves her- dont give benefits till they have been here legally for 5 years AND contributed t the system. i have more ideas.. lol

  42. 02/07/2011, Jack wrote

    Maggie knew about Kondratiev, and saw this coming. This is why she reduced the gov’t share of the economy. That is why she opposed subsidy, trying to get everyone working in jobs that paid their way. Had the last 13 years built on her start we would now be better placed. Dig out the voting slips for the 2005 election, cross reference the serial numbers to the electoral register, find who voted for the Party of Evil, and tax them to pay for the cost of their choice of gov’t.

  43. 02/07/2011, Richard Clifford wrote

    The thing not to do again is to generate growth on the back of a housing boom over decades. That was always going to come back & bite us all on the bum. So it is, and will further, next year & beyond. This was always a pathetic approach to growth generation led by Labour since 1997. Also a divisive one around one of the most important purchases any adult ever makes. There are some truths more grown up polities accept about the limits to growth. Ours didnt and has shafted UK property for a long time to come.

  44. 02/07/2011, Paul wrote

    Even if we find a way to soften the blow, it’ll happen again. We need to prevent the artificial boom to avoid the inevitable bust. So we need to do real things that will effect real change. My solutions are to legalise freedom…

    1. Abolish bailouts

    We need to stop moral hazard in all its forms. People who blame capitalism don’t seem to understand that too big to fail bailouts are not capitalist at all.

    2. Abolish fractional reserve banking

    The heart of the problem. We could just stop implicit bailouts and deposit insurance and have free-banking instead. That would cause an exodus toward 100% reserve banking anyway. The inexorable destruction in value of our currency forces people to stop being savers and to start being speculators with pensions invested in stock markets or not to save at all.

    3. Abolish central banking

    The enabler of FRB and the thieves of economic production. Cemtral banking is a disgrace. We need free market interest rates.

  45. 02/07/2011, Paul wrote

    Central banking was designed to protect a corrupt and ruinously unfair system – which it does with remarkable efficiency.

    Low interest rates stop people saving and prevent foreign investment. In this environment, capital borrowed by entrepreneurs is by FRB credit expansion and not from real savings – a snake eating its own tail.

    Even if we find a way to soften the blow, it’ll happen again. We need to prevent the artificial boom to avoid the inevitable bust. So we need to do real things that will effect real change. My solutions are to legalise freedom…

    4. Abolish deposit insurance

    This keeps the FRB system going even more and allows consumers to disregard risk when banking on the grounds that their money is “protected”. Few ask how that’s possible and few seem to care that the insurance comes via “money-printing”.

    5. Abolish legal tender laws

    The gaoler and night-watchman of the system, forcing us to be milked by fiat currency inflation and FRB.

  46. 02/07/2011, Paul wrote

    6. Abolish capital gains tax on competing currencies.

    The other gaoler stopping us from protecting ourselves elsewehere.

    7. Pass a balanced budget amendment.

    Stop government getting us in to so much debt. If they were forced to tax us to grow, that would arrest the rate of growth somewhat and promote more self-sufficiency and it may even – shock horror – shrink government!

    8. Abolish employers NI

    Why are we taxing job creation? It makes no sense.

    All other measures are… to quote an overused bromide… simply re-arranging deckchairs on the titanic.

  47. 02/07/2011, Greg wrote

    Equalise the risk weights

    SME loans are less profitable for banks than other lending because of Basel risk weights.

    SME loans need 2 – 5 times more capital, assuming risk weights of 100% for loans to unrated SMEs and risk weights of 20-50% for securitised and other rated lending. The lower the risk weight, the more the bank can gear up, the more its ROE.

    If it’s 5 times less profitable to lend to SMEs, they are the first loans to go when reserves are under pressure: BoE data from May shows business lending incl SME was down, but lower risk-weight securitised lending incl consumer credit and mortgages was up http://www.ft.com/cms/s/0/337971f4-a236-11e0-bb06-00144feabdc0.html#axzz1Qy6qT8Pw.

    Risk weights fuelled the sub-prime bubble and now they are starving the SME sector of credit, it’s time to replace them with a simple leverage ratio.

    Per Kurowski has been saying this for years http://subprimeregulations.blogspot.com/

  48. 02/07/2011, William wrote

    People are not taking the Maurice Strong influence seriously enough. At the Rio Summit in 1992 he said, “Isn’t the only hope of saving the planet that the industrialised civilisations collapse? Isn’t it our job to bring that about? Out of that came Agenda 21 or The Earth Charter. We are now witnessing the effects of this monstrosity. Thanks to scientific ignorance on the part of our political leaders, the CO2 nonsense was accepted as fact and we are now shackled. Time to take them off.

  49. 02/07/2011, William wrote

    People are not taking the Maurice Strong influence seriously enough. At the Rio Summit in 1992 he said, “Isn’t the only hope of saving the planet that the industrialised civilisations collapse? Isn’t it our job to bring that about? Out of that came Agenda 21 or The Earth Charter. We are now witnessing the effects of this monstrosity. Thanks to scientific ignorance on the part of our political leaders, the CO2 nonsense was accepted as fact and we are now shackled. Time to take them off.

  50. 03/07/2011, Bruno Prior wrote

    We are weighed down by rents, in two senses: the unsupportable, artificially-inflated value of the land beneath our bricks and mortar; and the value to some organisations (mostly the Vertically-Integrated Large Enterprises and the Greater Bureaucracy) of the morass of complex, targeted interventions by government in our activities as businesses and individuals.

    We are missing the point when we talk about red tape and the cost of government. They are symptoms, not causes, and a small part of the broader problem. To become competitive again, what we really need to scrap are the complexities and disincentives in our institutional framework. Businessmen need to be able to make decisions based on their judgment about future markets supported by the evidence of their accounts, not (as at present) on the best guess about what government and its cronies will do next and what the balance of perverse incentives created by them will reward (regardless of real economic merit).

  51. 03/07/2011, Bruno Prior wrote

    When people talk about the government doing one thing or another to encourage one sector or another, they are unwittingly supporting the approach that is crippling our economy. Government must stop trying to calculate what outcomes are preferable and then trying to deliver them. A good start would be to sack all its economists. A government that really believed in market discovery and spontaneous order rather than central calculation and planning would not need pseudo-economists pretending to calculate the incalculable to justify their micro-managing mechanisms.

    We will start growing when we have radically reduced both types of rents. Government will be smaller, but that will be a side-effect. Shrinking government without shrinking government’s belief in its ability and responsibility to pull levers simply makes that lever-pulling more arbitrary and error-prone.

    See Roger Koppl’s “Big Players and the Economic Theory of Expectations” to understand the impact of interventionism.

  52. 03/07/2011, Albee wrote

    Merryn – you say that to tax capital instead of income would break the conract between wealth creator and government, but governments have regularly broken such covenants. Brown’s pensions tax grab, Cameron’s attempts to break public sector pension contracts etc. These are capital attacks in the same way, but hit the poor rather than the rich- that’s the true difference.

    The reason there is no rebuilding of the economy is because the ‘boomer’ generation have built capital wealth (mostly in houses) by gearing debt for 40 years or more, now they are retiring and leaving the debt bill and payments to be picked up by the generations below them.

    That’s what I call breaking covenants – big time!!

  53. 03/07/2011, Martin Drew wrote

    If the State stops propping up the housing market and lets house prices fall to sensible levels then people like me desperate to buy a house to live in would be able to own our own home and would spend more.

    Buy to letters spend the bare minimum to maximise profit, private owners spend more to make a home.

    If there are others like me, I am spending as little as possible while I rent to maximise the amount I can save since interest rates aren’t helping my capital to grow. I live in walking distance to work and only fill my car once a month. There is very little room in my rented studio flat so I don’t buy things so VAT
    Doesn’t really bother me.

  54. 03/07/2011, marie wrote

    Public sector workers/MPs should be made to make their own
    pension arrangements – be given a small amount each month to
    contribute towards a private pension. They should not be entitled to
    gold plated pensions at the expense of everybody else/especially
    the young.
    We will have to leave the EU. Human rights are at the expense of
    victims or taxpayers.
    We will have to impose an immigration system designed to ensure
    we only admit people we need – and it will have to favour people
    from the East who speak eastern languages such as Mandarin.
    Europe is not going to be in a position to buy our goods and
    services for much longer, with the possible exception of Germany. But as we buy a lot from them, they are unlikely to
    cut us off completely from trading with them.

  55. 03/07/2011, Marie wrote

    The balance of economic power is shifting to the east with whom we will have to compete. We will not do so unless we invest in
    new technologies/engineering/sciences and art and design.
    University courses such as these should be subsidized. Not
    charged to the student at £9000 per year. All other courses
    that cannot make a case for helping our economy or our exports
    could be charged at £9000 per year and/or reduced in number.

    We should limit immigration because currently these people
    can access our services to medical care/education etc without ever having contributed.
    Entrepreneurs should be given grants.
    Companies in growth sectors should be given grants.
    Companies willing to properly train people in apprenticeships
    with recognised qualifications in trades etc should be given grants.

  56. 03/07/2011, Marie wrote

    We should limit immigration because currently these people
    can access our services to medical care/education etc without ever having contributed.
    Entrepreneurs should be given grants.
    Companies in growth sectors should be given grants.
    Companies willing to properly train people in apprenticeships
    with recognised qualifications in trades etc should be given grants.

  57. 03/07/2011, marie wrote

    Schools with good results in Maths and separate sciences or
    other subjects USEFUL to the economy should be given extra
    money.
    Schools with good results weighted to their intake should be given extra money (but soft subjects will not count unless there is a strong correlation that these subjects benefit the economy.
    Day release and good results for plumbing and bricklaying
    or other trade would count.
    Benefits should not be paid unless people are British citizens
    or have made contributions for 5 years.
    Frank Field should be made a lord and any Cabinet be forced to
    have him and Ian Duncan Smith as part of the team.
    The grants could be funded by the savings from pulling out of
    any involvement in Libya and Afghanistan. Whatever the
    merits, our own problems should come first and I am not
    sure the citizens of these countries are happy with our presence.

  58. 03/07/2011, Roberto Birquet wrote

    Only read the first half of the comments, but there are some awful ones.
    5. Stop wasting our time thinking we can run Britain like a city state.
    15. The minimum wage should be abolished.
    Not a clever idea. The poor spend a large part of their income. Give them less, and they’ll spend a lot less. Result, worse recession a consumer-based economy like Britain.
    22. Introduce a flat tax n reduce benefits accordingly.
    Rubbish for the same reasons as the last.

  59. 03/07/2011, Roberto Birquet wrote

    Merryn
    Two suggestions from Twitter followers, both in line with the general trend of your thoughts
    1) Radical reduction of welfare state,intro a flat tax.end compensation culture,privatise all state assets and leave EU
    2) Transfer tax burden off labour and onto economic rent.
    ————
    1. Rubbish.
    2. Much better.

  60. 03/07/2011, Roberto Birquet wrote

    Adam Smith and the entire neoclassical economists rightly found that work creates wealth. And don’t believe the industriailsts who’ll say otherwise. They are heard cos they are rich, and say what they only in their own self interest, (Smith).
    So
    get people spending to boost demand. A large cut in VAT to be paid for with a land tax.
    Once people/economy feels safe, keep the land tax, reverse the VAT cut, and slash both council tax and standard rate of income tax.
    Encourage people to spend, and work. Enourage investment away from land (which will always be there anyway) and into wealth creation.
    Stop saving banks from housing crash. That policy is stupid:
    1 buyers have to save more, and for longer to pay higher price, and so are spending less.
    2. It means fewer sales in the short-medium term leading to bankruptices for the likes of Moben.
    Utterly counter-productive.

  61. 03/07/2011, Roberto Birquet wrote

    29
    increase interest rates to 7%.
    That will mean savers will start spending again and boost the economy.
    ————-
    I sympathise on interest rates, it’s unfair to have savers bail out banks and the heavily indebted (That’s what the policy is).
    But I fail to see how it would get people spending. Higher rates would get people saving more, not spending, surely?

  62. 03/07/2011, Roberto Birquet wrote

    Clericus
    Reduce taxes. (Flat taxes preferably)
    Slash government spending.
    Make it mandatory that government cannot spend more than it takes in taxes.

    Simples!!
    —————–
    Simples is exactly what that is. And terrible.
    Slash govt spending. Just tried in Greece – disaster. and in Ireland – disaster.
    Flat taxes means taxing lower earners more, which means those most likely to spend have less money.
    These are not economy-boosting ideas. They are self-serving, allow me to be richer, and pay working classes less ideas. And so omnipresent from the Moneyweek readers, I see why the country’s in such a mess, and why there’s such a dearth of ideas.

    I thought the same in my economics classes. These guys (lecturers and economics profession) have not come up with an original idea for the past half century.
    That led to such confidence that economics had been solved, that everyone failed to even look at the danger signals. “Don’t worry, the economy’ll sort itself out.”

  63. 03/07/2011, Roberto Birquet wrote

    42
    Maggie knew about Kondratiev, and saw this coming. This is why she reduced the gov’t share of the economy.
    ——————-
    I seem to remember a class in which we were shown evidence against many widely held views, one was this.
    Govt spend as percentage of GDP rose in the 1980s. Taxation also went up (more indirect taxes, lower direct taxes). It was largely down to the swollen welfare budget after trebling of unemployment, and the now famous Sick pay.
    The problem with this Thatcherite/Austrian school theory is that in deindustrialised areas of the North, alternative industries never arrived. There was suppposed to be a reversal of crowding out. It never happended. Jobs only came back to the north with public sector.
    It has not crowded out, but filled in where the private sector went away. Find a solution to that, and we’ll be at least halfway there.

  64. 03/07/2011, Bruno Prior wrote

    Roberto,
    So the trouble was that the Labour government was too free-market, was it? And government spending isn’t a large enough proportion of GDP? And our academic economists are all classical liberals? You appear to have lived in a parallel universe to many of the rest of us for the past two decades.

  65. 03/07/2011, Roberto Birquet wrote

    44 Even if we find a way to soften the blow, it’ll happen again. We need to prevent the artificial boom to avoid the inevitable bust. My solutions are
    1. Abolish bailouts

    We need to stop moral hazard in all its forms. People who blame capitalism don’t seem to understand that too big to fail bailouts are not capitalist.
    ———————-
    Unfortunately, Paul, others decide what capitalism is. And it is only what makes the powerful richer.
    Hence all the talk of flat taxes (ie higher taxes for bottom half of society), bailing out the property sector, power to the banks…

  66. 03/07/2011, Roberto Birquet wrote

    Bruno
    The last Labour govt deregulated finance and turned as blind eye to the retail banks doling out mortgages on self cert applications to anyone with a pulse. It accepted the idea of deindustrialisation, and bet the world on deregulated finance (both too neoliberal) and never-ending creditfuelled economy to boost tax receipts for the NHS and Sure Starts.
    It was a disaster.
    ——-
    our academic economists are all classical liberals
    ————-
    I was at Birkbeck, and they all were. And what’s more, our lecturers agreed this was almost universally accepted.

    The only areas in economics that were being discussed were in micro-economics. And even there, there was an appalling presumption that we all compute our economic decisions along rational lines.

  67. 03/07/2011, Roberto Birquet wrote

    Bruno
    PS
    Govt tax and spending should be counter-cyclical as much as possible – but certainly partly so. NewLabour/G Brown was not that. But the oaf thought he/neoliberalsim had ended boom ‘n bust.
    So, no, I do not think govt spending should have been higher.

  68. 04/07/2011, Bruno Prior wrote

    Roberto,
    Gordon Brown, the neoliberal? Neoliberalism is the sort of term that means whatever the person heaping abuse on it wants it to mean. But as you blame Gordon’s profligacy on his neoliberalism, perhaps you could tell us which version of neoliberalism you are thinking of, which promotes the reckless expansion of government expenditure under the conditions we saw pre-2007? It looked like good old-fashioned Labourite tax-borrow-and-spend to me.

  69. 04/07/2011, Bruno Prior wrote

    The interventionists love to point at deregulation in the financial sector. The financial sector was still regulated, in a system created by Brown. But the regulator was as effective as regulators normally are. Seems a strange justification to rely more heavily on regulation.

    We had no free market in finance. Besides the failed regulation, we had the Greenspan (now Bernanke) Put and the implicit (now explicit) guarantee on institutions too big to fail.

    This wasn’t (and isn’t) the free market. It was (and still is) corporatism. Big government loves big business, and vice versa. It’s so much easier for lever-pullers to do so through a few big companies than lots of small ones. And big companies benefit from big-government interventions, because they create barriers to entry that protect their margins.

    It’s not government and the people on one side and business on the other. It’s government and the corporations on one side, and ordinary businesses and people on the other.

  70. 04/07/2011, Alastair MacMillan wrote

    Growth, how to achieve it ?
    A few rules: 1) Governments do not generate long term growth by taking money out of taxpayers pockets and spending on their growth projects. 2) Sustainable growth is achieved at the small business end and not the big business end of the economy. 3) A stable fiscal environment provides the most fertile grounds for growth. 4) Reduction in the burden of debt is essential in the achievement of 3), this is not just the deficit but debt itself as to achieve long term growth we need to stop depreciating our currency which is akin to theft. How do we achieve the above:
    a) Abolish tax credits, child allowance, bus passes, winter fuel allowance, free TV licences, housing benefit but increase basic rate tax & NI threshold to £22,000 for working people and £30,000 for Pensioners. b) Reduce pension saving regulation to make it worthwhile for all to save for reitrement. c) Abolish employers NI. TBC

  71. 04/07/2011, mr wrote

    “Freefall” by Joseph Stiglitz gives some clues. As one of the few (US) economists to not only forsee the size of the bust but to warn of it in advance, he deserves to be listened to now.

    We are now suffering the fall out from under-regulated free markets – the responsibility of successive governments in the key western economies and the greed that this engendered in the big financial institutions, leading to the marketing of inappropriate lending products, often to those who had little or no understanding of them.

    Their motivation to do so was the opportunity they presented to take a margin on such products before securitising them. So the lenders had no interest in the future ability of the customer to pay back what theyhad borrowed while those who bought up these securitised assets had no way of knowing about their ability to do so, relying on the credit-rating agencies.

    So the way forward is tighter regulation of the financial institutions.

  72. 04/07/2011, Alastair MacMillan wrote

    d) Abolish Corporation tax for profits of less than £100,000. c) & d) will instantly provide a sufficiently large carrot to encourage people to take the plunge whilst also encouraging captial retention in the business. e) Transfer most of the Gov’t capital budget by using tax incentives to make it worthwhile for private companies to build infrastructure, that they would own and operate charging the user rather than; present discredited system of HMG via PFI. f) Privatise all hospitals and turn NHS into a BUPA / PPP type of body thereby driving down costs whilst retaining quality and principle of being free at the point of use. g) Leave the EU. h) g) will allow the UK to conduct a bonfire of regulations and allow the introduction of sunset clauses into all new regulations. i) All schools to become independent and funded by parental voucher.

  73. 04/07/2011, Alastair MacMillan wrote

    My small business of 24 people paid over to the state nearly £350,000 in tax last year, we could have employed another 14 people with it. A substantial burden when one is trying to compete in a global economy.

  74. 04/07/2011, Roberto Birquet wrote

    Alastari 72
    Privatise all hospitals and turn NHS into a BUPA / PPP type of body thereby driving down costs whilst retaining quality and principle of being free at the point of use.
    —————-
    Privatised medicine/ healthcare all around the world drives UP costs.
    Where is your evidence to the contrary?

  75. 04/07/2011, Roberto Birquet wrote

    The interventionists love to point at deregulation in the financial sector. The financial sector was still regulated. Seems a strange justification to rely more heavily on regulation.
    ——–
    Regulate to ensure there are cash reserves in banks, and they are not relying on short-term money markets. No-one forced international markets to buy CDOs. But unregulated, and not knowing what they were doing, they did so. And millions suffer – unaffordable homes, then unemployment.

    The same deregulation was evident in the 1920s. It took us to depression, followed by war.
    Banks should serve us, not the other way around.

  76. 04/07/2011, Roberto Birquet wrote

    Bruno
    We had no free market in finance. Besides the failed regulation, we had the Greenspan (now Bernanke) Put and the implicit (now explicit) guarantee on institutions too big to fail.
    ———-
    We did have free market in finance, (the shadow banking system). But it’s true that it was not completely free. But the main culprits were the credit rating agencies upon whom many market actors based their decisions. They classified debt after a decade of excess as low risk. This shows us that information out there is inherently unreliable.

    Therefore we need huge safeguards. And that means big government.

    When the free market was allowed to roar, Lehmanns went bust, and so did almost everyone else. I do not want big state corporatism nor big business corporatism (modern capitalism; and a result of so-called creative destruction). But we have to accept the limits of markets in a way we have failed to do so for 30 years.

  77. 04/07/2011, Jim wrote

    “Why does no one have any real proposals to boost growth?” – surely a rhetorical question, Merryn?

    Politicians are reluctant to suggest any serious cutting back of the State because that would mean opening to question virtually ALL of their activities – their very raison d’etre.

    As the State becomes larger, the price discovery mechanism in an economy becomes more and more distorted, and the more the State has to intervene to ‘correct’ the effects of its previous interventions.

    Our heavily-regulated manufacturers cannot compete with less-regulated manufacturers overseas. So here we are faced with either reducing regulation, or protectionism. The former is unpopular with the governing classes, voters, and employees, whereas the latter is disastrous in terms of competition and productivity.

  78. 04/07/2011, Jim wrote

    Probably the most ruinous intervention a State can make is the establishment of a money-creating cartel – ie, central reserve banking, as Paul describes above (44-46).

    Once all the ‘funny money’ created via FRB’s monetary expansion and artifically low rates for ‘capital’ reach their limits, and inflated the prices of commonly-owned assets like real estate to the point where they are completely decoupled from everything else, then we are faced with massive collapse in prices of those assets (deflation), or the rise in prices of everything else (inflation)… or a mixture of the two (stagflation).

    On top of this, we have nurtured in our population the idea that we can all somehow unendingly borrow our way into wealth. And why wouldn’t they believe it? It’s exactly how government itself operates.

    With such structural, political, cultural, and monetary barriers to true wealth creation… it’s not hard to be pessimistic about Britain’s (and most of the West’s) economic prospects.

  79. 04/07/2011, jim mack wrote

    Leave the EU –1/ This solves the Immigration problem immediately
    2/This allows a bonfire of useless red tape to occur
    3/We no longer have to support fraudulent sovereign govts
    4/We get rid of all the hanger-ons eg the kinnocs and their little but incredibly costly empires
    Reduce all benefits by 10% and ignore the outraged screams
    Review every activity which requires a licence and abolish at least 2/3 of these especially any pertaining to small business start-ups
    Freeze all Public sector spending and Council Tax for at least 5 years
    But mainly get us out of the EU

  80. 04/07/2011, Ian Chapple wrote

    If all interbank lending and Credit default swaps were banned, banks would have to balance their own accounts and manage lending risk. There would be no cross infection if one bank went bust which it should be allowed to do, with limited government guarantees for depositors. This might encourage real competition for capital, decouple savings rates from central bank lending rates, and make more investment available for industry.
    If governments all stopped targeting 2% inflation and stopped worrying about growth all the time, the economies of each country would be forced into balance by their exchange rates with their trading partners.
    Where would this leave us?

  81. 04/07/2011, Simon wrote

    Privatise large parts of education and health. We’re good at these services and could grow income and jobs by exporting more of them.

    Recognise in the tax code the difference between those who create jobs and those who take jobs. For example, eliminate employers national insurance on small businesses, the self-employed and any large companing growing employment. Why we tax employment when we’re so short of jobs is beyond me. Likewise reduce income tax for any entrepreneur or small business that grows employment

    Eliminate capital gains tax for entrepreneurs. And let them deduct their initial equity investment against income tax.

  82. 05/07/2011, Hugo wrote

    Cut government expenditure by scrapping the Trident program. Thereby, putting more money into peoples pockets. Dave from Romford is absolutely right about unprofitable businesses; let the sick ones die. Australia and New Zealand were forced to follow this policy with their farms. It was the only thing that worked. Look at them now!

  83. 06/07/2011, Peter Watson wrote

    The problem that must be addressed with most urgency to get Britain back to work and competitive again is to remove our high labour cost low wage regime. We accept that taxation on tobacco is good as it discourages us from smoking, alcohol like wise so how do we justify high taxes on firms who actually employ people to create wealth?

    The politicians need to a understand that wages cannot be taxed (Adam Smith and others) so the money we ‘take home’ is our real wages not the number at the top of the pay slip. All the other deductions are employment taxes. We know very well the effect this impost has on labour costs. For every £1 an employee takes home the employer has to find another 70p on top.

    So in year one remove employers NIC and in year two reduce income tax so labour costs are reduced immediately and then demand is put back on the high street. I suggest the increase in production would repair the increased deficit very quickly.

  84. 07/07/2011, Mike wrote

    To boost growth immediately, by which I assume you mean GDP growth, we could:

    - increase immigration, for growth it doesn’t really matter whether this increases unemployment or the benefits bill as this would all be added to GDP
    - either declare the UK a tax free zone, or close all other tax zones
    - abolish planning permission, news homes would spring up everywhere and there would be a boom in construction
    - allow assisted suicide, wealth would be transferred from the old to young and the young are much more likely to spend it, thus stimulating the velocity of money. Not to mention the benefits of ‘death tourism’.

    Well that is GDP sorted, now what about the debt and deficit. i.e. what is the point in growth if it doesn’t sort out the debts.

  85. 10/07/2011, NG2 Will wrote

    When do businesses increase employment, when they are swamped with demand or making large profits?

    http://traderscrucible.com/2011/06/16/businesses-hire-more-people-when-they-are-swamped-with-demand-not-when-they-have-high-profits/

    The question then becomes how to increase demand?

    We agree cutting Jobs Taxes would help, as would Sales Taxes, they could be replaced with a Land Value Tax allowing for taxes alreadly paid on land such as Council Tax, TV Licence etc.

  86. 10/07/2011, NG2 Will wrote

    The Economy has pneumonia, the private sector is very sick and weakened.

    Private households and businesses are paying down large amounts of the large debt they borrowed even though interest rates are on the floor.

    In these circumstances the private sector needs public sector help by increased net deficit spending.

    If and when that changes, private household and business debt is reduced enough to stop cuts in consumption and investment, the public net deficit can and will reduce naturally on its own.

    http://www.youtube.com/watch?v=OWGDWYB5KZ0

  87. 10/07/2011, Critic Al Rick wrote

    GDP has been at unsustainable levels, effectively partly fuelled by debt; and ‘Growth’ effectively partly, if not mostly, fuelled by growing debt (and probably affected by manipulated inflation figures).

    In repect of the situation the UK is in, how on Earth does any rational person expect the UK to both reduce debt and ‘Grow’? It’s like expecting a business which is running at a loss to simultaneously pay down debt and expand.

    It’s madness to expand an unprofitable business without appropriate fundamental changes, and those changes must include management reorganisation at all levels, making better use of assets and reducing wastage; the business in all probability will first contract, by necessity, before it becomes profitable.

    Madness it is, but those ‘blinkered’ incompetents consistently at the helm of UKplc have encouraged it to ‘expand’ whilst being ‘unprofitable’. Sheer and utter madness.

    cont …

  88. 10/07/2011, Critic Al Rick wrote

    … cont

    UKplc’s GDP will, inflation aside, shrink whilst it makes sufficient appropriate fundamental changes; whilst it:
    a) reorganises management at all levels
    b) makes better use of its assets
    c) reduces wastage

    But there is a dilemma; Democracy as we know it will never achieve making sufficient appropriate fundamental changes. We have incompetent politicians and an electorate represented by someone whimsical, selfish and short-sighted; what a team!

    So, to make sufficient better use of our assets and sufficient wastage reduction necessitates a radical change of management at the top. We need someone competent at the helm acting in the best long term interests of the majority and allowed to complete long term policies without hindrance, including that from the EU.

    Suitable Autocratic governance, not corrupted Democratic incompetence. Nothing less radical. We are at a hugely pivotal time in history.

  89. 15/07/2011, Jason wrote

    I dont usually post here and dont claim to be a Graduate or an Economist. Just a working class chap who invests in a few UK companies in the Sector I work in.
    I agree with some of the posts above on the investing in Entrepreneurs. Our country got Rich on being that 1 step ahead. Due to our Inventors and radical thinkers. Visionaries.

    I think far far too many take our Country and its benfits for granted and need to take a long hard look at most other countries in the world and how people exist in them. Then compare it to ours……
    Then they need a good kick up the backside and reminded that millions of Men died along the way. Its time for reality to set in and all of us accept holiday time is near an end.

    Sacrafice, hard work, belief and vision. It pays in the end I honestly believe. :o)

    Okay thats my moan for the Year and the crux of the problems..

  90. 19/07/2011, Merryn wrote

    Ideas for fixing the US. Some might work here. http://www.businessweek.com/magazine/content/11_25/b4233053223432.htm

  91. 10/11/2011, Tim wrote

    In the past decade or two, Growth (and employment) has been funded on the back of Government and Personal Debt. It is now realised that the debt levels built up are unsustainable – every individual and privete sector company knows that if you borrow more than you can repay you go bust.

    In the present global economic situation there is no realistic possibility of growth until governments and individuals achieve borrowings and “earnings” which are more evenly matched. This will take 5 to 10 years – 5 to 10 years of no growth or negligible growth.
    Meanwhile the UK population is rising, mostly as a result of immigration. We therefore a growing number of people (especially young people with no job and no prospects of a jo

  92. 10/11/2011, Tim wrote

    In the past decade or two, growth (& employment) has been funded by Debt – both government & personal debt. It is now realised that the levels of debt built up are unsustainable – every individual and private sector company knows that if you borrow more than you can repay you go bust, and the Bond market knows this too.
    In the present global economic situation there is no realistic possibility of growth until governments and individuals have borrowings and “earnings” which are more evenly matched. This will take 5 to 10 years to achieve – 5 to 10 years of no growth or negligible growth.
    Meanwhile the UK population is rising, mostly as a result of immigration. We face therefore a growing number of people (especially young people) with no jobs and no prospects of a job – and thus no stake in a stable and lawabiding society. No politician will of course admit this.
    We are in for a rocky ride.

  93. 14/02/2012, NeutronWarp9 wrote

    A lot of contributions and few real answers to a multi-solution question. Economic growth comes from selling goods and services. Assuming the UK wishes to re-balance towards ‘proper jobs’, why not ask the obvious questions. What are our highest value imported products. Can we make them better. Can we develop products from them and sell in growth markets. The UK is world class at innovation and yet consistently fails to produce the items the world needs or thinks it needs. Some industries are not labour-intensive, but jobs can be created in the supply line. Handheld communications, digital media, green energy generation; the possibilities are endless, but it will take many innovators and entrepreneurs requiring something of a government-incentivised culture change in what I view as our elitist, risk-averse, increasingly regressive society.

  94. 09/11/2012, Bredgette wrote

    The financial crisis and the credit drought it has left us with.

Commenting on this article closed

MoneyWeek magazine

Latest issue:

Magazine cover
Going bust

What happens when countries default?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Vote in the MoneyWeek Readers' Choice Awards

Vote for your favourite financial services companies in the inaugural MoneyWeek Awards, and you could win a year's subscription to MoneyWeek magazine. Find out more and vote here.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.