Tuesday, 26 July 2011

Hot air ruining our economy?

I'm not going to spend an age going over how ridiculous the ONS and Gideon's appraisal of our economy is. I'm not going to dwell on why forecasters didn't appropriately factor in the effect of an extra bank holiday to their GDP growth estimates. I'm not going to ask how it is that a predicted economic boost around olympic ticket sales has somehow turned in to an economic drag.

What I am going to say though, is this notion that somehow the weather is to blame for our economic situation is utter bullshit.

I can understand that the weather may have certain effects, slight ebbs and flows that can make some minor changes to our economy. I can even slightly accept that yes...maybe a bit of snow and freezing weather does discourage some people from going to work those few days...discourages them from spending. But today's claim that it's too WARM? Pull the other one.

Take a look at the GDP growth data over the last few years. The temperature of our summer's has increased every year (pretty much) for the last decade or so. Perhaps it's a crass analysis, but GDP hasn't stalled as the country has had warmer and warmer years, infact it has been very consistently rising...recession aside.

If warm weather, and indeed cold winters, were really a problem for economies, then we should be seeing a tailing off of GDP growth from 1998 to 2008, not a straight trend line.

I am not prepared to accept is that we should at all focus on what must be a miniscule impact on our economy from the weather, it is political opportunism to pick on the weather as an excuse; it shows just how little of the economy is out of the control of government influenced factors if anything, since this is the best excuse they seem to be able to come up with.

The problems with our economy lie at the heart of the decisions made by the Treasury and this government, not with abstract or uncontrollable factors.

If people had jobs they weren't afraid of losing at a moment's notice, with a good salary that wasn't eaten away by inflation every month, if food prices weren't soaring, if fuel prices weren't allowed to increase by over twice the rate of inflation, and if we weren't in post-banking-crisis that helped to ensure borrowing for those suffering from all the above was even harder than normal...maybe then they'd be out spending more, working harder, living happier and putting our economy on the real road to recovery that we seem to have missed the turning for many, many months ago.

We are, like it or lump it, a consumer economy right now. Extra exports would be ideal, but no-one can magic up a manufacturing industry to save our economic growth in a single parliamentary term. If this government want to keep us out of another recession they need to realise their mantra on "private sector creating jobs" just isn't going to cut it. Even if they currently are creating jobs, the signs are that the jobs are part time and not at all conducive to either a) increasing our GDP by any meaningful factor or b) allowing those people to spend money, since they will not have enough to do more than purchase essentials. If this government is serious about the economy they will take the lead like only a national government can and make those jobs happen themselves, directly or indirectly, and do the right thing for the short term recovery of this country...and therefore hopefully lay the foundations for a longer term return to normal.