Conservative ministers are out in force explaining why their economic policy is working so well, and that is why unemployment has hit a 17 year high today at 2.57million or 8% of the workforce.
What a day for the right and the left of British politics. The same old arguments start being trotted out at these times, along with a few that we thought were dead and buried. Not to mention some rather interesting excuses and analyses of statistics.
This morning began with the government claiming that the rising unemployment was all to do with the Euro zone problems and nothing to do with government policy. Prior to this, all previous bad economic news was the legacy of the nasty Labour Party.
Later in the day, the government were stating that the slow down of the UK economy had only occurred in the last 3 months ignoring the fact that the UK economy has virtually not grown at all for 9 months. Flat lining of the economy did not happen in the last 3 months.
Of course George Osborne has also blamed, the cold weather, the wrong snow, the hot weather, the royal wedding and bank holidays for economic woes over the past 9 months. At some point you would think they would run out of excuses.
Don’t you love politicians who when they are out of power blame everything that happens on the incumbent government, and then when they get into power it is always someone elses fault.
The one thing about this recession that has been different than previous downturns over the past 30 years has been how employment has seemed to be a little more resilient. Now though there has been a large nudge upwards in the unemployment rate and we will probably see it continue on its path to 3 million.
It is funny that this “nudge” has happened at a time when the cuts begin to “kick in”. But maybe this is just a “coincidence”.
The pattern of unemployment is similar for youth unemployment as it is in the rest of the Euro zone now, with it reaching around 19% of those under 25 out of work. At least we do not have the 45% youth unemployment of the likes of Spain, but as usual, it is the young (and old) who are sacrificed by an economic downturn.
David Cameron today defended the government’s strategy by saying that their economic policy is working because they have brought down interest rates to 0.5% giving the economy an advantage and being competitive. Perhaps it was an oversight, but the interest rate in the UK has been at this level since 2009, prior to the present government coming to power.
In the Spectator, a rather skewed look at youth unemployment figures has revived the call from some to abolish the minimum wage for the sake of the under 25’s. The graph below tells the story.
The analysis of this graph by Fraser Nelson is that the reason that youth unemployment has risen in the UK to Euro zone levels is the minimum wage or the evil solialist regulation imposed by the last Labour government.
However, the minimum wage came into being in April 1999 and the rapid increase in unemployment came toward the end of 2007, at the time the Banking crisis hit, and the credit crunch began. Matching almost to the day that the queues began outside the doors of the Northern Rock. Another coincidence?
Like the idea that when we have a threat to national security we should put aside our objections to torture because it is inconvenient; we now have the argument that we should not pay people a low but half decent wage because the economy is flat lining.
It is unlikely to be the minimum wage causing youth unemployment to rise, but the wider problems of a debt crisis across half the industrialised world.
Like the arguments that we have a deficit problem because we spent too much, they ignore the real problem which is the collapse of tax revenue which is the real problem.
We now have to watch this space, as the IMF again reassess the UK economic plan. They have already made noises to the effect that the UK government may have to draw back on its deficit reduction plan as the elephant in the room “GROWTH” suffers.
As unemployment creeps up, and the economy flat lines with no growth, the deficit will continue to grow and not fall despite the cuts in public expenditure.
Like a ship navigating iceberg ridden seas, the coalition has chosen to decide on the speed and course of the ship, without taking into account the changing conditions of the journey. Simply a recipe for disaster.
I fear there are more stormy seas ahead, oh and a few more excuses. Maybe Father Christmas will be next on George Osborne’s hit list!
World Economic Crises – Austerity
Recession what Recession