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.

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.