mick silver
29th October 2013, 09:02 AM
Real unemployment at 23%, £430bn ADDED to the national debt and STILL running £100bn+ deficits a year – there is NO recovery George OsborneToday George Osborne is going to come out and try and tell you how well the economy is doing, in fact the economy is apparently doing so well that George Osborne, the Fauxstere Chancellor (so-called because as we’ve been at pains to point out (http://www.goldmadesimplenews.com/gold/the-uk-budget-spending-up-15-borrowing-up-57-and-debt-up-83-wheres-that-austerity-again-10316/) there has been NOausterity in the UK whatsoever), is now being tipped (http://www.dailymail.co.uk/news/article-2415331/Osborne-bounces-favourite-replace-Cameron-thanks-increasing-pace-economic-recovery.html) to take over from Cameron as leader of the Conservative party.
So before you have to listen to Osborne try and tell you how well everything is going, here’s some inconvenient truths about the state of the economy that show that the real problems for the UK economy lie in the near future and not the past.
First up let’s take a look at the employment situation in the UK, in short it has been dreadful. Here is what the official unemployment rate has done over the past few years.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-unemployment-rate-august-2013.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-unemployment-rate-august-2013.png)(click for sharper image) It is very clear from this one chart the unemployment in the UK hasn’t gone anywhere in the past four years – and it certainly doesn’t look like there has been any meaningful recovery in terms of unemployment in the UK.
But the real employment story is actually worse than even that above chart looks. As Mark Carney said (http://www.goldmadesimplenews.com/analysis/mark-carneys-first-public-speech-what-he-really-means-2-11503/) during his maiden speech to the public, around 1 million new jobs have been part-time jobs:
More than half of the increase in employment since the recession has been in part-time jobs. Many part-timers would prefer to work full time. If the recovery were fuelled by involuntary part-time jobs becoming full time, nearly half a million fewer new jobs would be created.
And when you count all those inactive in the UK labour force the real level of unemployment in the UK is nearing 25%. From the ONS (http://www.goldmadesimplenews.com/analysis/if-the-economy-is-doing-so-well-why-is-the-uk-unemployment-rate-still-around-8-where-its-been-for-nearly-5-years-11417/):
The inactivity rate for those aged from 16 to 64 was 22.3%, virtually unchanged from January to March 2013 but down 0.3 percentage points from a year earlier. There were 8.99 million economically inactive people aged from 16 to 64, down 10,000 from January to March 2013 and down 105,000 from a year earlier.
Then there is the national debt, remember that? When the Tories came into office the national debt stood at around £760bn – so what is that number today? According to the government funded ONS that number now stands at nearly £1200bn.
Oh, and if you count all the bail-outs the UK taxpayers were forced to give the banks, the actual debt of the UK is over £2000bn (http://www.goldmadesimplenews.com/analysis/the-uk-deficit-is-not-being-reduced-as-the-tories-add-more-than-50-to-the-national-debt-in-4-years-10561/):
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/real-UK-debt-march-2013.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/real-UK-debt-march-2013.png)(click for sharper image) Yes, George Osborne has single handedly added some £430bn to the national debt in just over three years – this equals a rise in the national debt of 55%.
To put that £430bn into perspective, that equals the annual Defence budget, Education budget, Transport budget, Healthcare budget, Police budget, Housing Budget, Environment Budget, Industry budget, Interest on the debt, AND Personal social services budget… COMBINED!
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-government-spending-2013.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-government-spending-2013.png)(click for sharper image) But it gets worse – by the time George Osborne faces the electorate in 2015 he will have added nearly 85% to the national debt.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-National-debt-End-of-Labour-governemnt-Vs-End-of-Tories-1st-term-Spring-2015-%C2%A3bn-.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-National-debt-End-of-Labour-governemnt-Vs-End-of-Tories-1st-term-Spring-2015-%C2%A3bn-.png)(click for sharper image) Then there is the deficit, you remember that as well? The deficit was the one thing that Osborne promised he would reduce in his election pledge back in 2010, in fact it was their very first pledge:
We will safeguard britain’s credit rating with a credible plan to eliminate the bulk of the structural deficit over a Parliament. Our fiscal policy will seek to help keep interest rates lower for longer. the independent bank of england will continue to target 2 per cent Consumer Price Index (CPI) inflation, and will use its new role in prudential supervision to preserve financial stability.
And just for the record the Tories failed to ‘safeguard’ that credit rating after beingdowngraded by Fitch in March of this year (http://www.goldmadesimplenews.com/gold/and-just-as-predicted-here-come-the-ratings-agencies-to-downgrade-the-uk-fitch-ratings-watch-negative-10359/).
So just what is the deficit that George Osborne is going to run this year? Around £120bn. To put that number in context if we go back to just 2007/8 (before the UK taxpayer started giving billions and billions to bailout the banks), the Labour party were running deficits of just £36.4bn.
And the notion that Osborne is reducing the deficit is completely ridiculous. For 2012/13 the deficit for the UK was just £86.2bn – so running a £120bn deficit for 2013/14 is an increase of 40% from last years deficit!
In fact, if you go to the Conservative party’s website (http://www.conservatives.com/Splash.aspx), the very homepage says the following:
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Tories-cut-the-defict-by-a-thrid%E2%80%A6-apprently.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Tories-cut-the-defict-by-a-thrid%E2%80%A6-apprently.png)(click for sharper image)You see they’re trying to tell you that the deficit has been cut by a third? This is simply disingenuous at best, and deliberately so.
It isn’t just the annual deficit that people should look at, but rather the cumulative deficits year-in, year-out, that should be looked at.
For example the previous Chancellor, Alistair Darling, during the Labour party’s last four years in office borrowed in total £316bn – George Osborne is planning on borrowing £483bn during his first four years in Office – materially HIGHER than anything the Labour party did whilst in office by about 50%.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Total-UK-borrwing-Labour%E2%80%99s-last-4-years-compared-to-Tories-first-4-years-%C2%A3bn.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Total-UK-borrwing-Labour%E2%80%99s-last-4-years-compared-to-Tories-first-4-years-%C2%A3bn.png)(click for sharper image) And finally just so it’s clear let us take a look at spending. When Osborne took office he spent £687.7bn in 2010/11 – by the time of the next election in 2015 the government will be spending £744bn – an INCREASE in spending of around 8%.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/2015-spending-budget.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/2015-spending-budget.png)(click for sharper image) And if we compare Labour’s last four years in office compared to the Conservative’s first four years spending has INCREASED by around 15%.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Total-UK-Spending-Labour%E2%80%99s-last-4-years-compared-to-Tories-first-4-years-%C2%A3bn.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Total-UK-Spending-Labour%E2%80%99s-last-4-years-compared-to-Tories-first-4-years-%C2%A3bn.png)(click for sharper image) And there was us thinking that the Tories were the party of ‘low spending’.
We could go on with many more examples of just why the UK economy has in fact never been weaker, but you get the idea. For example the OBR themselves put out a detailed report (http://www.goldmadesimplenews.com/analysis/office-for-budget-responsibility-the-fiscal-position-of-the-uk-is-unsustainable-11249/) about the future of the UK economy and claimed:
Broadly speaking, the fiscal position is unsustainable if the public sector is on course to absorb an ever-growing share of national income simply to pay the interest on its debts. This notion of sustainability can be quantified in a number of ways.
and again:
In the absence of offsetting tax increases or spending cuts this would widen budget deficits over time and eventually put public sector net debt on an unsustainable upward trajectory. The fiscal challenge posed by an ageing population is one the UK shares with many developed nations.
and again:
Fiscal sustainability analysis is designed to identify whether and when changes in government policy may be necessary to move the public finances from an unsustainable to a sustainable path. To make this judgement, it is necessary to define what we mean by ‘unchanged’ policy in our long-term projections.
and again:
Our central projections, and several of the variants we calculate, show that on current policy we would expect the budget deficit to widen sufficiently over the long term to put public sector net debt on a continuously rising trajectory as a share of national income. This would clearly be unsustainable.
and again:
the public finances on an unsustainable path, and were to prove accurate, we would expect policymakers to take corrective action. It is clear that longer-term spending pressures, if unaddressed, would put the public finances on an unsustainable path in our central projection.
and again:
This trajectory would clearly be unsustainable, but it would also probably be common to most advanced economies.
And if something can’t be sustained, it won’t.
Any ‘bounce’ in the UK’s manipulated GDP numbers (http://www.goldmadesimplenews.com/analysis/when-an-honest-deflator-is-used-uk-gdp-only-grew-at-0-5-not-1-5-11472/) (real GDP is running at an anaemic 0.5% for the past year), simply will not be sustained or meaningful – this is still the longest running economic downturn ever in the UK. Just look at the below chart (http://www.goldmadesimplenews.com/analysis/the-only-chart-you-need-to-judge-the-bank-of-englands-monetary-policy-to-be-a-complete-failure-11178/) to see that the UK economy is still below its 2008 peak.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/uk-gdp-longest-recesssion-ever.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/uk-gdp-longest-recesssion-ever.png)(click for sharper image) The UK is storing up for itself huge problems in the way of massive debts, which lest we forget do actually have to be repaid – but there simply isn’t the jobs or the money to do this.
All Osborne has done is borrow GDP from the future to enjoy today – the underlying debts will clip the wings of this ‘so-called’ recovery in the next year or so (if not sooner), as the inevitable insolvency of the UK becomes more and more apparent. And you can thank George Osborne for that moment when it comes.
Oh, and he can expect much, much more of this:
So before you have to listen to Osborne try and tell you how well everything is going, here’s some inconvenient truths about the state of the economy that show that the real problems for the UK economy lie in the near future and not the past.
First up let’s take a look at the employment situation in the UK, in short it has been dreadful. Here is what the official unemployment rate has done over the past few years.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-unemployment-rate-august-2013.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-unemployment-rate-august-2013.png)(click for sharper image) It is very clear from this one chart the unemployment in the UK hasn’t gone anywhere in the past four years – and it certainly doesn’t look like there has been any meaningful recovery in terms of unemployment in the UK.
But the real employment story is actually worse than even that above chart looks. As Mark Carney said (http://www.goldmadesimplenews.com/analysis/mark-carneys-first-public-speech-what-he-really-means-2-11503/) during his maiden speech to the public, around 1 million new jobs have been part-time jobs:
More than half of the increase in employment since the recession has been in part-time jobs. Many part-timers would prefer to work full time. If the recovery were fuelled by involuntary part-time jobs becoming full time, nearly half a million fewer new jobs would be created.
And when you count all those inactive in the UK labour force the real level of unemployment in the UK is nearing 25%. From the ONS (http://www.goldmadesimplenews.com/analysis/if-the-economy-is-doing-so-well-why-is-the-uk-unemployment-rate-still-around-8-where-its-been-for-nearly-5-years-11417/):
The inactivity rate for those aged from 16 to 64 was 22.3%, virtually unchanged from January to March 2013 but down 0.3 percentage points from a year earlier. There were 8.99 million economically inactive people aged from 16 to 64, down 10,000 from January to March 2013 and down 105,000 from a year earlier.
Then there is the national debt, remember that? When the Tories came into office the national debt stood at around £760bn – so what is that number today? According to the government funded ONS that number now stands at nearly £1200bn.
Oh, and if you count all the bail-outs the UK taxpayers were forced to give the banks, the actual debt of the UK is over £2000bn (http://www.goldmadesimplenews.com/analysis/the-uk-deficit-is-not-being-reduced-as-the-tories-add-more-than-50-to-the-national-debt-in-4-years-10561/):
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/real-UK-debt-march-2013.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/real-UK-debt-march-2013.png)(click for sharper image) Yes, George Osborne has single handedly added some £430bn to the national debt in just over three years – this equals a rise in the national debt of 55%.
To put that £430bn into perspective, that equals the annual Defence budget, Education budget, Transport budget, Healthcare budget, Police budget, Housing Budget, Environment Budget, Industry budget, Interest on the debt, AND Personal social services budget… COMBINED!
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-government-spending-2013.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-government-spending-2013.png)(click for sharper image) But it gets worse – by the time George Osborne faces the electorate in 2015 he will have added nearly 85% to the national debt.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-National-debt-End-of-Labour-governemnt-Vs-End-of-Tories-1st-term-Spring-2015-%C2%A3bn-.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/UK-National-debt-End-of-Labour-governemnt-Vs-End-of-Tories-1st-term-Spring-2015-%C2%A3bn-.png)(click for sharper image) Then there is the deficit, you remember that as well? The deficit was the one thing that Osborne promised he would reduce in his election pledge back in 2010, in fact it was their very first pledge:
We will safeguard britain’s credit rating with a credible plan to eliminate the bulk of the structural deficit over a Parliament. Our fiscal policy will seek to help keep interest rates lower for longer. the independent bank of england will continue to target 2 per cent Consumer Price Index (CPI) inflation, and will use its new role in prudential supervision to preserve financial stability.
And just for the record the Tories failed to ‘safeguard’ that credit rating after beingdowngraded by Fitch in March of this year (http://www.goldmadesimplenews.com/gold/and-just-as-predicted-here-come-the-ratings-agencies-to-downgrade-the-uk-fitch-ratings-watch-negative-10359/).
So just what is the deficit that George Osborne is going to run this year? Around £120bn. To put that number in context if we go back to just 2007/8 (before the UK taxpayer started giving billions and billions to bailout the banks), the Labour party were running deficits of just £36.4bn.
And the notion that Osborne is reducing the deficit is completely ridiculous. For 2012/13 the deficit for the UK was just £86.2bn – so running a £120bn deficit for 2013/14 is an increase of 40% from last years deficit!
In fact, if you go to the Conservative party’s website (http://www.conservatives.com/Splash.aspx), the very homepage says the following:
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Tories-cut-the-defict-by-a-thrid%E2%80%A6-apprently.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Tories-cut-the-defict-by-a-thrid%E2%80%A6-apprently.png)(click for sharper image)You see they’re trying to tell you that the deficit has been cut by a third? This is simply disingenuous at best, and deliberately so.
It isn’t just the annual deficit that people should look at, but rather the cumulative deficits year-in, year-out, that should be looked at.
For example the previous Chancellor, Alistair Darling, during the Labour party’s last four years in office borrowed in total £316bn – George Osborne is planning on borrowing £483bn during his first four years in Office – materially HIGHER than anything the Labour party did whilst in office by about 50%.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Total-UK-borrwing-Labour%E2%80%99s-last-4-years-compared-to-Tories-first-4-years-%C2%A3bn.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Total-UK-borrwing-Labour%E2%80%99s-last-4-years-compared-to-Tories-first-4-years-%C2%A3bn.png)(click for sharper image) And finally just so it’s clear let us take a look at spending. When Osborne took office he spent £687.7bn in 2010/11 – by the time of the next election in 2015 the government will be spending £744bn – an INCREASE in spending of around 8%.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/2015-spending-budget.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/2015-spending-budget.png)(click for sharper image) And if we compare Labour’s last four years in office compared to the Conservative’s first four years spending has INCREASED by around 15%.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Total-UK-Spending-Labour%E2%80%99s-last-4-years-compared-to-Tories-first-4-years-%C2%A3bn.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/Total-UK-Spending-Labour%E2%80%99s-last-4-years-compared-to-Tories-first-4-years-%C2%A3bn.png)(click for sharper image) And there was us thinking that the Tories were the party of ‘low spending’.
We could go on with many more examples of just why the UK economy has in fact never been weaker, but you get the idea. For example the OBR themselves put out a detailed report (http://www.goldmadesimplenews.com/analysis/office-for-budget-responsibility-the-fiscal-position-of-the-uk-is-unsustainable-11249/) about the future of the UK economy and claimed:
Broadly speaking, the fiscal position is unsustainable if the public sector is on course to absorb an ever-growing share of national income simply to pay the interest on its debts. This notion of sustainability can be quantified in a number of ways.
and again:
In the absence of offsetting tax increases or spending cuts this would widen budget deficits over time and eventually put public sector net debt on an unsustainable upward trajectory. The fiscal challenge posed by an ageing population is one the UK shares with many developed nations.
and again:
Fiscal sustainability analysis is designed to identify whether and when changes in government policy may be necessary to move the public finances from an unsustainable to a sustainable path. To make this judgement, it is necessary to define what we mean by ‘unchanged’ policy in our long-term projections.
and again:
Our central projections, and several of the variants we calculate, show that on current policy we would expect the budget deficit to widen sufficiently over the long term to put public sector net debt on a continuously rising trajectory as a share of national income. This would clearly be unsustainable.
and again:
the public finances on an unsustainable path, and were to prove accurate, we would expect policymakers to take corrective action. It is clear that longer-term spending pressures, if unaddressed, would put the public finances on an unsustainable path in our central projection.
and again:
This trajectory would clearly be unsustainable, but it would also probably be common to most advanced economies.
And if something can’t be sustained, it won’t.
Any ‘bounce’ in the UK’s manipulated GDP numbers (http://www.goldmadesimplenews.com/analysis/when-an-honest-deflator-is-used-uk-gdp-only-grew-at-0-5-not-1-5-11472/) (real GDP is running at an anaemic 0.5% for the past year), simply will not be sustained or meaningful – this is still the longest running economic downturn ever in the UK. Just look at the below chart (http://www.goldmadesimplenews.com/analysis/the-only-chart-you-need-to-judge-the-bank-of-englands-monetary-policy-to-be-a-complete-failure-11178/) to see that the UK economy is still below its 2008 peak.
http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/uk-gdp-longest-recesssion-ever.png (http://www.goldmadesimplenews.com/wp-content/uploads/2013/09/uk-gdp-longest-recesssion-ever.png)(click for sharper image) The UK is storing up for itself huge problems in the way of massive debts, which lest we forget do actually have to be repaid – but there simply isn’t the jobs or the money to do this.
All Osborne has done is borrow GDP from the future to enjoy today – the underlying debts will clip the wings of this ‘so-called’ recovery in the next year or so (if not sooner), as the inevitable insolvency of the UK becomes more and more apparent. And you can thank George Osborne for that moment when it comes.
Oh, and he can expect much, much more of this: