The right wing press announced last month that Britain is on 'recession watch', following the economy contracting by 0.1% in both September and October....
It's probably fairer to call the economy stagnant, rather than in decline, but stagnant is hardly a success story.
The Right Wing press are obviously blaming Rachel Reeve's autumn budget as the main causal factor for economic stagnation, and there's probably some truth in that, there do seem to a couple of logical correlations...
- private sector employment has fallen at its fastest level since the Pandemic, with employers put off hiring by the national insurance increase, and improving worker's rights won't help there either.
- Reducing the inheritance tax on agriculture and business property inheritance was also maybe short sighted. This applies to all businesses, not just farms, of which there are 4.8 million, employing 14 million people.
The first of these policies will have a direct and immediate effect on the economy, a negative effect, the second maybe won't have such a huge direct effect, there aren't that many businesses that are going to fold as a result given the £3M threshold, however the protests and lack of confidence this has engendered will probably harm investment.
The business world is basically now looking at Labour and thinking 'what the fuck is next....'?
The problem....
Well we do have massively underfunded public services.... and those tax hikes have been designed to fund healthcare, education and so on.
And the simple truth is these require tax.
And what is the point in delivering growth if that growth isn't distributed in the form of social benefits for the majority, rather than just a tiny handful of people at the top....?
The problem we have is that this idea of redistributive economics isn't popular at all. Mainly because people have the impression that the state redistributes benefits to the undeserving.
And then there's the tricky issue of social care, maybe on that front Labour has learnt its lesson... that's gonna need even more tax, probably, but they've successfully booted that back to 2028, pending a review launching this year, just what we need, a PhD on how to fund social care in three years time and until then, just carry on!
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What they report is in nominal amounts. What goes unreported is that with a stagnant economy, you're losing in real terms due to inflation. Another problem looming is demographics, which puts an additional burden on younger workers earning less money who would bear the cost of an aging population,
Oh I agree, it's almost certainly worse than the stats suggest, expect for the few in the shadow economy!
Government monopoly services can only be perpetually underfunded. That is the nature of a market service divorced from public pricing and consumer choice. I recommend reading about public choice theory. Additionally, the biggest driving force in our boom/bust economic cycle is central bank money supply inflation through money creation and credit expansion. These actions enrich the politically-connected through the Cantillon effect while sending false signals into the market resulting in entrepreneurial malinvestment as described by the Austrian Business Cycle Theory.
It's impossible to tax society into prosperity. It's impossible to provide quality goods and services through beauraucracy. The escalating economic turmoil we have experienced for the past quarter-century is a direct consequence of governmental intervention, and I recommend reading or listening to The Pretense of Knowledge by Friedrich A. Hayek, because his warning when he received his Nobel prize in economics is still relevant today.
I'm not sold on neoliberalism.... pretty much every developed country has a social democratic third way style system, seems to work pretty well for most people. I'd also much rather live with national health rather than a US insurance based system.
I think there's a balance to be struck.
People talk and wrote as if the IS insurance cartel system is a product of "the free market." Far from it. What we have here is the result of a century of medical lobbying for special government provileges, tax codes, and political intervention.
Governments need to appear legitimate to gain at least grudging acceptance from the public, and services like education and healthcare can easily be made to appear like essential government programs. However, the result is always mediocre at best, and often completely broken. Canadians are often medical tourists to border states because American expense is preferable to long waits. further, if people pay in cash, the prices are far less than the ones we see from the insurance industry stories.
There is even a small but growing trend of clinics offering services with open prices and internal pharmacists using very small markups showing how much more affordable medicine and surgery can be without the insurance cartels. It's not theory, it's demonstrable even now in the US.
Easy answers are hard to come by, but those who don't have to fix it will pretend otherwise. I would question a few things Labour have done so far. I saw the other day that they have retreated on phasing out gas boilers and encouraging solar. New houses have to be made more efficient and it will save owners a lot. I assume there was some lobbying involved.
It could take a couple of years to see real differences, so I hope they are on the right path.
All this crap from Musk is just a distraction. He can fuck right off!
Invest it people, services and infrastructure and the economy will grow. It is fundamentally based on people making it work. Fail to invest in those people and the economy fails. 14 years of doing precisely the opposite has had its impact - but that is what happens if you elect a government whose instinct is to govern as little as possible.
I don't know man, if even Britain is having problems economically, the world is not in a very good position economically. We in Turkey have been having this problem for years and the solution is more taxes. You can check how well it works by looking at the value of the dollar exchange rate against the Turkish lira or the inflation data. I hope everything will be better for you.