Its not just the weather that is making for misery this summer. If the feel good factor is tied to how much we’ve got to spend then good reason for long faces. We’ve all got less to spend than any time since 2003.
If you take price increases into account, the amount we’ve all got to spend has fallen by 1% since the previous quarter, according to the Office for National Statistics (ONS). And that's after the tax man has taken his cut.
These figures reinforce last week's results on GDP growth. Those showed that UK economy shrank far more than expected. The gloom that was announced then was of an economy contracting by 0.7% in the second quarter of the year.
The lesson, apparently, not learnt is that real incomes drive the economy. ‘Cos if we don’t have the income we can’t spend. What we spend in turn accounts for around two-thirds of GDP.
So no cash, no sales. It’s not rocket science, but clearly beyond our Chancellor.
Squeezing families' finances to the lowest level since 2005, is not a recipe for growth but for decline. Increasing VAT and cutting tax credits was and is just the wrong approach to the crisis.
If such a policy is a disaster for the UK it is a catastrophe for Wales.
With Wales’s GVA currently about a quarter less than the average for the UK as a whole. An economy of low wages, and a high dependency on benefits. It is sheer madness to cut these further and another argument why regional pay is a bad idea. This ain't the way out of the economic hole we're in. No, dear Mr Osborne needs to stop digging.
The Silk Commission is beavering away looking at whether the Assembly needs powers over taxation. My advice to them is, "pack up its bags and find something more useful to do."
Unless there is a change in the economy of Wales the tax raised here wouldn’t pay for an eisteddfod, let alone the expenditure of the Assembly.
Raising taxes on a poor people is not a good basis for going forward.
Devolving real powers over finance without devolving real macro economic powers is a disaster waiting to happen.
Its not the Scots that need devo-max but Wales. And soon.
All the signs are that UK economy is sinking. To be tied to a sinking boat is not the best of moves. Westminster's economic management hasn't after all been a success story. for Wales. Would getting Wales's hands on the economic levers be any worse?
I don't understand this, Gareth- "Unless there is a change in the economy of Wales the tax raised here wouldn’t pay for an eisteddfod, let alone the expenditure of the Assembly. Raising taxes on a poor people is not a good basis for going forward."
ReplyDeleteThe tax raised in Wales according to Holtham is £18-19bn, more than the expenditure of the Assembly which is £14-15bn. The bit we can't afford is the stuff on top of the Assembly, pensions and benefits mostly.
We wouldn't have to raise taxes on anyone, let alone poor people.
Devo-max on the other hand, which you call for, would actually expose Wales too much because we'd lose the block grant and only have the £18-19bn of taxes, and have to pay for welfare (unless you're on about a Welsh version of devo-max which I don't know about yet).
So not sure what you're getting at here Gareth.
What Wales needs is what you say, our own hands on the economic levers, along with a fairly funded block grant. The right ratio, as suggested by Holtham in his latest article, as well as by Eurfyl ap Gwilym is 50% Welsh taxes and 50% Welsh block grant (needs calculated). Wales would still have a basic and fair safety net and would be able to fiddle with its own taxes- and pay for any consequences.
The general drift of the blog was that if we persist with a rock bottom economy then less and less expenditure would occur and Wales GDP would continue to be rock bottom. The tax base of the economy would continue to shrink. To change this the whole economic armoury needs to be devolved .
ReplyDelete"To change this the whole economic armoury needs to be devolved"
ReplyDeleteThat seems perilously close to independence!
Good comment, on the whole!
Entirely agree. We need an independent Wales, almost no public sector and certainly no welfare.
ReplyDeleteWelsh people have got to learn to work. Work for less than the English, a lot less. And work for longer hours. And learn to create businesses. And learn how to export. And how to interact with other cultures. And learn what the meaning of customer service is.
Oh, such a lot of learning. And such a lot of hardship. But the sooner we start the sooner we will catch up with the rest of the world. Five generations should do it.
As long as we have an economic strategy for Wales designed in London and dictated by the needs/whims of the City, we will remain poor. It's a chicken and egg situation - the only way to overcome this is to have an economic policy designed in Wales for Wales.
ReplyDeleteps don't feed the troll