Tuesday, 20 December 2011

Economic woes

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.


  1. Oh dear, I fear you are back to talking twaddle. Twaddle for twaddle's sake!

    'With little real control on the levers of the Welsh economy, the Welsh Government look weak and helpless'. Oh gosh, if it isn't the Welsh government that receives the massive transfers from the UK Exchequer then who is it? Just because they spend it on the wrong things, things that don't make a difference, things that don't improve life for the people of Wales, you can hardly blame the rest of the UK.

    Time you grew up mate, just like the rest of your local 'journo' buddies. Wales is indeed dependent upon Westminster because, as Adam Price says, 'Wales is a land where nothing succeeds like failure.'

  2. You're right that a subsidy does make for a dependency culture. I'm all for nations standing on their own two feet. But you can't have it both ways moaning about the subsidy and then refusing to provide a country with the levers of economic control so that they can sort themselves out.

  3. But the politicians have never asked for such 'levers of economic control' perhaps, in part, because they fear that the electorate may start to hold them accountable for failure!

    That's why we always talk about the language. It makes life so much easier.

  4. But Gareth, it's not 'refusing to provide a country with the levers of economic control' that is the problem. The problem is that Carwyn Jones, Rhodri Morgan and Labour don't want the levers of control.

    Labour don't want control over taxation or real law making. They prefere to whinge and complain and blame the Tories.

    Labour is the problem. Labour campaign against having 'the levers of economic control'.

  5. Carwyn Jones ostensibly does want control over some forms of taxation. The catch is that he means aggregates tax, stamp duty and air levy. You have got to be joking if you think altering those taxes would fundamentally change the fortunes of the Welsh economy.

    Powers to vary income tax and corporation tax would be real changes and would open up a huge issue of accountability. Labour would never accept those being levied in Wales by Welsh politicians.

    Yet despite this shocking complacency Carwyn Jones is held up as "Welsh politician of the year" because he beat Nick Bourne and a knackered Plaid Cymru. It's like calling someone a great athlete because they've won an egg and spoon race.