Tuesday, 20 December 2011
Woe, woe and thrice woe, as Frankie Howard used to say. It’s certainly true when looking at the outlook for the economy.
The head of the IMF visited the first woe upon us when she said all nations, starting with Europe, needed to head off a crisis with risks of a global depression. The lack of growth is contagious and her warning underlines how interdependent the countries of the world are.
And as if to underline the IMF’s prediction, another warning of woe comes from Mario Draghi the European Central Bank (ECB) President. He sees the euro zone debt crisis spreading and deepening next year. This happens as Britain refused to contribute its £25bn share to the latest International Monetary Fund bailout fund for distressed states.
According to the ECB the failure of politicians to act in time will cause a "systemic crisis” of similar proportions as was seen at the time of the Lehman Brothers collapse in 2008.
So there we have it, two international financial institutions predicting very hard economic woes ahead.
The third woe comes from nearer home. Indeed from our very own Nationwide. Their consumer confidence index shows confidence at almost an all time low. The index is 40 nearly half the long term average of 77.
It is not difficult to understand why this should be, rising unemployment and the high cost of living.
The survey indicated that people judge it to be a bad time rather than a good time to make a major purchase. If this judgement is translated into behaviour and consumers act on their instinct, we can expect the figures on Christmas trading to be gloomy indeed.
If we don’t shop until we drop over Christmas this will be bad news indeed for the UK economy. Many companies look to Christmas as the high point of their sales, so if demand is not there at this time many will be in receivership early in the new year.
To add further to the woe the Nationwide survey indicated that people were also expecting house prices to fall by an average of 1.1% over the next six months.
Although last week’s inflation figures were down slightly to 4.8% it’s still a great deal higher than wage increases. leaving a big gap in household incomes.
Those living in Wales face a new year of gloom and there is little prospect that the Welsh Government can do much about it.
“Standing Up for Wales” seem a very hollow slogan now. With little real control on the levers of the Welsh economy, the Welsh Government look weak and helpless. Although the`Silk committee is looking into these lack of powers, it’s work has hardly begun and its conclusions are a very long way off. It’s the here and now that preoccupy the population. They want action now.
And for now at least Wales is dependent on Westminster for it’s salvation. But there’s little sign that they have Wales at anywhere near the top of the agenda.