Wednesday, 1 August 2012
Less in the pocket
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?