0% growth forecast highlights need for stimulus to promote employment, growth and spending

The Bank of England’s latest warning that the economy has hit the buffers and will come grinding to a screeching halt later this year comes as no surprise.

Tony Burke is the Assistant General Secretary of Unite

The Bank of England’s latest warning that the economy has hit the buffers and will come grinding to a screeching halt later this year comes as no surprise.

Unite have been warning there is an urgent need to dump the cycle of “self defeating austerity” (as Len McCluskey aptly described it) and go for growth.

Instead, chancellor George Osborne’s cure for the UK’s economic ills is “more of the same” austerity, and even more austerity, coupled with weakening employment rights to gain traction and build growth.

The “March Of The Makers” – a boost in manufacturing employment to drive the economy – has hardly taken a step forward. Only the automotive sector has brought some sunshine into the manufacturing gloom.

Sounding like the BBC shipping forecast, Sir Mervyn King, in his statement yesterday confirming a “wasted year”, said:

“We are navigating rough waters and storm clouds are continuing to roll in from the euro area.”

And ever topical he also said:

“Unlike the Olympians who have thrilled us recently, he says, the UK economy has not yet reached full fitness. It is to the Olympic team that we must look for inspiration in a challenge that could take years to achieve.”

Not reached full fitness? We are still sitting it out in the stands! Even the Olympic “bounce” the Government is clearly hoping for is seen as being short lived and being downgraded to a “dead cat bounce”.

 


See also:

It’s a complex economy, stupid 8 Aug 2012

Alexander at odds with Osborne over UK credit rating 6 Aug 2012

Osborne’s thrown a javelin through his own foot by failing to make FTT a reality 2 Aug 2012

Double blow for Osborne: 52% want him sacked, and just 2% of Tories want him as leader 30 Jul 2012

Latest GDP numbers mean Britain’s economy has shrunk since general election 25 Jul 2012

How Osborne sent the “march of the makers” into reverse 1 Jun 2012

Osborne’s ‘march of the makers’ is beating a retreat 2 Aug 2011


 

Some in the City are saying even the Bank’s new forecast of growth from 0.8% down to 0% may prove optimistic to say the least; we could be facing a triple dip recession later this year.

With no clear industrial strategy, except printing money hoping that low inflation (predicted to be below 2%) will help through cash for household spending via lower mortgage repayments, the UK faces a long term future of stagnation. The reality is family budgets are being squeezed through zero pay increases or sub inflation increases at best.

That is why in Unite we are seeing a growth in the requests for industrial action ballots in manufacturing companies and the private sector as hard-pressed members, sick of imposed austerity, fight back and attempt to make up lost ground.

Unite has just released a film on the impact of the economic crisis and how workers’ wages are running out after just 21 days, forcing many workers to borrow until their next pay day just to make ends meet:

Now that Lords Reform is not on the agenda, the government say they are planning to concentrate fully on growth, but it will prove to be futile if they continue to ignore the need for an industrial and interventionist strategy – the “Plan B” Len McCluskey argued for this week to kick start the economy.

And was Danny Alexander, Chief Secretary to The Treasury, softening us up when he said this week the UK’s AAA credit rating is “not the be all and end all” of government economic policy? Compare that to the announcement by rating agency Standard & Poor’s that Germany would keep its AAA rating and a downgrade was unlikely over the next two years.

The NASDAQ reported Germany had “a stable outlook” and the country had the “capacity to absorb large economic and financial shocks”. Germany has invested in its manufacturing base, has avoided making ideological attacks on workers’ rights, and has worked with unions and employees to ensure they withstood the worst of the crisis.

Last week’s UK manufacturing figures were also more bad news. The seasonally adjusted Index of Manufacturing and the Index of Production from the ONS have both fallen by 4.3 per cent in June 2012, compared with June 2011. These results and forecasts underline the desperate need for a change of course – for government-led intervention and stimulus to promote employment, growth and spending.

18 Responses to “0% growth forecast highlights need for stimulus to promote employment, growth and spending”

  1. Lord Blagger

    The government spent 150 bn last year on a stimulus.

    It’s spending 100 bn this year on a stimulus.

    Which bit don’t you get about 250 bn not working?

  2. Newsbot9

    The government spend 150bn last year on you and it.
    It’s spending 100 bn this year on you and it.

    Which bit don’t you get about “you and it”. Banksters, wasters and grifters.

  3. ralf milibnad

    the govt is spending itself into bankruptcy on a fiscal stimulus (almost 200 billion this year alone) and has also printed 300 billion or so as a monetary stimulus.

    maybe its time to think of something else.

  4. Newsbot9

    Yes, like collecting the tax you owe. That’d be a good start!

    Back in reality, again, a stimulus requires spending on Growth, something this government have taken great pains to avoid. Also, propping up banks is not a stimulus, it’s propping up banks. None of it dribbles down.

  5. mikems

    Another boorish right-winger with nothing to say.

  6. ralf milibnad

    agree that propping up banks was a stupid waste of money. let bad business fail. and stop it getting too big to fail.

  7. Newsbot9

    That’s…not what I said.

    Actually, I don’t believe letting the banks fail would have been a good idea. However, at the very least civil and probably criminal prosecutions against failing banks, their directors and boards were, to me, indicated.

  8. Blarg1987

    It is not working as it is not creating jobs, if the goverment spent say 20 bn in total on infastructure schemes etc that would create far more job employmeent and growth per pound then the current process of the BoE buying up sghares in companies which all that does justifies CEO’s over generous pay packages and takes money out of the company to go abroad. Paying the local guy to help buold a road / school or hospital means he spends the momney locally on local services that are less likely to go offshore and pays a reasonable salary then a ridiculus one to a handful of people.

  9. gordon brown

    although his comment had far more substance than your ad-hom attack.

    any chance of replying or debating the point? do you think there should be more or less stimulus? what about QE? what do you think the appropriate size of the state is? do you think people should be able to claim out of work benefits for 1 month, 1 year, a lifetime?

  10. freddy laker

    I think the true jobless total is about 6 million and has been the same for 20 years. the way to get it to fall and get people into work is to change the incentive regime. ie pay less dole, pay more for work or expect something in exchange for benefits.

    I favour an ’employer of last resort’ scheme where if you are unemployed the government will give you a job on min wage doing something socially useful. then you have money to live, a job and you can move into the real labour market as opportunities allow. money without expecting work in return is, as Gandhi said, one of the great social sins.

  11. freddy laker

    i apologise if I misread you. I think letting the banks fail would have been bad but they should never have been allowed to get to that size in the first place. a failure of government regulation.

    I think criminal proceedings should be undertaken ‘if’ there were any laws broken – rather than retrospectively. But its hard to see what the banks did that was criminal. It was the implicit support from the taxpayer that allowed the banks to behave the way they did. If bankrupting a company led to 5 years in debtors prison, then they would behave differently. Its all about risk and reward. For the banks there was no risk (as proved when they were bailed out) and large rewards. It is for the government to legislate to get the balance right.

    Any business that cannot be allowed to fail cannot be allowed to exist. It is corruption of the free market and it is the government’s job to set the legislative framework within which the banks operate.

    I suppose we need lots of smaller banks who know that failure means bankruptcy (with deposits protected via insurance – an insurance that would be unaffordable for banks behaving recklessley).

  12. gordon brown

    ps I don’t owe any tax. I work for the government and they take it at source.

  13. Newsbot9

    You don’t think that the things they did were reckless and criminal? *Potentially* they should only have civil liability, but they were reckless, as the need for a bailout confirms.

    Setting up automatic punishments like that is never a good idea though, it needs to be case-to-case.

    And I’d point out that smaller banks don’t have the same issues. They can be bought out, as was one small co-op which found itself in trouble.

  14. Newsbot9

    Ah yes, you’re pre-emptively pleading your innocence of a charge I never raised against you, which makes me very interested in WHY…

    Earned income, fine, but I suspect unearned income.

  15. gordon brown

    They were reckless but recklessness in itself isn’t criminal. If what they did was criminal they should be prosecuted. And if what they did was criminal is not my judgement call but the law’s.

    Justice is about setting up a system where people know the effect of their actions. If they break the rules they can be prosecuted. That is not automatic but transparent. Not sure what you mean by “case-to-case” as that is how the justice system operates anyway. The rules are across the board but the application s of them is on a case by case basis.

  16. gordon brown

    you said

    “Yes, like collecting the tax you owe.”

    which sounds like an accusation that I owe tax. Which I defended myself against. do you even read your own posts?

    Have you ever heard of the Turing Test? I think you’ve failed it.

  17. Newsbot9

    Of course you don’t believe anyone not your kind of far right fanatic isn’t Human.

  18. Newsbot9

    Defending the banksters at all costs. And you don’t understand the law, I see.

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