Britain received some awful economic news this morning, with the Office for National Statistics calculating that the economy contracted by 0.5% in the final quarter of 2010.
http://www.bbc.co.uk/...
These figures are especially awful when you consider the economy grew by 1.1% in the second quarter and we seemed to be getting back in track, seemingly thanks to Labour's programme of fiscal stimulus. But of course since then a Tory government got elected and began making plans for fast and deep cuts, announcing the first cuts in October.
http://www.bbc.co.uk/...
Chancellor George Osborne has unveiled the biggest UK spending cuts for decades, with welfare, councils and police budgets all hit.
The pension age will rise sooner than expected, some incapacity benefits will be time limited and other money clawed back through changes to tax credits and housing benefit
What is especially scary is that no cuts have even been implemented yet, in fact public spending was actually slightly higher in December 2010 than it was the previous December. A major contributor to the sudden slump is fear of the cuts to come, with confidence taking a major hit. Even worse, VAT (sales tax) and fuel duty are going up, leaving people on low and middle incomes even more out of pocket.
Average wage growth during 2010 was about 2% and it being outstripped by inflation, which is now running at almost 5% if housing costs are included.
http://www.statistics.gov.uk/...
Average earnings growth including bonuses remained unchanged in the year to November 2010, from the October 2010 rate of 2.1 per cent. Growth in average earnings excluding bonuses (regular pay) also remained unchanged in November 2010 from the October 2010 rate of 2.3 per cent.
In the year to November, pay growth (including bonuses) in the private sector stood at 1.9 per cent compared with 2.4 per cent in the public sector. Excluding bonus payments, growth in the private sector stood at 2.2 per cent compared with 2.4 per cent in the public sector
People working in the public sector are having their pay frozen, which in real terms could mean a 5% cut. I really wish the Tories would stop insulting our intelligence by claiming this isn't for ideological reasons.
Ever since the Tories came to office, Cameron and Osborne have been talking down the economy in an attempt to win support for their economy strategy. Every criticism of their policies has been met with the tiresome response about the mess they were left with by Labour.
What they so recklessly overlooked is that if you talk down the economy you damage consumer and investor confidence. Fear of a recession can so easily lead to a recession. What is also very damaging to the Tories is that this is one thing they can't blame on Labour. In the link at the top of the page there is a video of George Osborne making a truly pathetic attempt to blame the snow for the slump, even though the ONS have said that even without the snow the economy still would have come to a standstill.
During 2011 taxes will rise and the coming £81 billion of cuts will begin to be felt. If the fear alone of this can send us sliding back towards recession it doesn't bear thinking about what will happen when it actually kicks in. The Tories and their Lib Dem partners are banking on the economy looking much better by 2015, however these figures are very damaging for them because Labour can point at them and say " we told you so".
Labour already have a 5 point lead in the polls, which represents a 12 point turnaround since the election last May. That lead could now blow out to double digits, and even more worrying for the Tories is that prolonged difficulties will alienate millions of younger voters for good.
http://ukpollingreport.co.uk
I'm due to graduate soon and it looks like it will be extremely difficult for people my age to get a decent job. Not only that, but when the jobs market does eventually pick up we'll be competing against people young than us, fresh out of university and without gaps on their CV. A lot of young Irish people are emigrating and soon the same will probably be happening here. Much as I want to stay and help sort out the mess, I have to say Australia is looking very tempting.
If we do slide back into recession it won't be Labour's fault, it will be the Tories' recession and they will alienate a whole new generation of voters, just like Thatcher alienated an entire generation in the 1980s.
It's not all doom and gloom. Some are optimistic for a bit of a bounceback in 2011 Q1 as they see 2010 Q4's figures as being artificially low. The manufacturing sector also grew and that combined with a struggling pound should help to boost exports, however if confidence takes a further a hit due to these figures then it really is looking grim.
This is what happens when a country elects a gaggle of over-privileged brats who went to the most expensive schools in the country and who have a radical anti-statist agenda ready to inflict on it. Cameron the conman may say he doesn't enjoy cutting, but really he and all his Tory chums are enjoying this. It's what they went into politics to do.
Update-Pretty shocked to see this shoot on to the wreck list so soon. Thanks everyone! :)
Update II- It appears most of the data is from October and November, before a single snowflake even fell. When December's data has been processed it could be even worse. This just makes it even more pathetic for the government to blame it on the weather.