So you thought it was all over with a deal finally being made on how to handle America’s debt. And in one sense it has, American politicians can now go on their holidays knowing that government can pay its bills. But it’s when they come back that the problems begin. How are they going to grow their economy?For the US economic woes are getting worse rather than better. A report just issued on consumer data show that in June American shoppers were cutting back on their expenditure. Thus taking more steam out of the economy.
The American economy relies on consumer expenditure for about 70 per cent of the GDP. Without the American shoppers playing their part their economy hits the buffer.
But it’s not only the US economy that gets into trouble but it effects world trade. That hits us all. Now a temporary fall in consumer spending could be shrugged off, but if this continues then a second recession will arrive, for sure. And with $2.1 trillion’s worth of government cuts in the next ten-years it would take a brave person not to predict this happening.
But that’s America you rightly say what can we do about? Well, according to the National Institute for Economic and Social Research something can be done.
The Chancellor needs to look again at his policies. They reckon that the Chancellor ought to loosen up a bit. Not him, maybe that too, but certainly the economy. The cuts that he’s imposed are too big and too soon. Less would improve output and employment.
The IMF warned earlier this week that in the UK there was still a significant risks to inflation, growth and unemployment.
So something needs to be done. Yes, a plan B.
And what about Wales? The Welsh Government should be straining every sinew to have as much control as it can over its own economy. The wait and see what’s offered by Cameron attitude adopted by Carwyn Jones is not the right response. The Welsh Government’s starting point should be all that is contained in the two Holtham’s report. The levers over the Welsh economy should be moved to Cardiff.
Of course, this will not make Wales immune from what is happening to the global economy, but it will allow a response that is appropriate to the state of Wales and not what is appropriate to a still largely prosperous economy of London and the South East of England.
Whilst the politicians are on holidays this blog will also move down a gear and appear less frequently until the conference season in September. But there may still be a Saturday tip or two.
'The Welsh Government should be straining every sinew to have as much control as it can over its own economy.'
ReplyDeletehear hear Gareth, enjoy your break and come back fresh Wales truly needs you telling it like it is.
'... but it will allow a response that is appropriate to the state of Wales and not what is appropriate to a still largely prosperous economy of London and the South East of England.'
ReplyDeleteJournalistic twaddle!
What is appropriate to Cardiff and the south will most certainly not be appropriate to Holyhead or Bangor or Rhyl or Queensferry or anywhere else up north.
As such, might as well let the seat of government remain in London. It's as good as anywhere else.
That is why London is the richest part of the EU and Wales one of the poorest precisely because they are in control of the levers of power. If you are going to make a comment please ensure you have a vague idea of what you are talking about!
ReplyDeleteThe great advantage we have in Wales is that like other small Countries we can adapt our approach to suit the different needs of the various parts of the economy and Country when we get control over those levers of power.
If you still aren't convinced, the only country in the western world with a worse record of regional inequality than the UK is good old Mexico. Hardly a glowing endorsement for the status quo.
This is one of my favourite Welsh blogs and one which often provides a much needed economic slant. Look forward to reading more of your posts Gareth.
ReplyDelete