According to statistics the recession is over but ask any of your friends or colleagues and they will tell you that the country is still in the mire and the real end of the recession is not known but hopefully it won’t be as long as Bob Dylan’s Never-Ending Tour which started around 1988 and is still going strong after nearly 23 years on the road so let us all hope that the our recession doesn’t last quite so long.
However there are no great grounds for optimism as the Government seem to rest all their hopes on an economic recovery with consumers spending the country out of recession when it is widely known by most financiers and economists that consumerism as we know it is dead and buried.
The economy of the country has been in a gradual decline since the 1960s and the only thing that has sustained it was the housing market and this was encouraged by feckless lending by Banks and over-borrowing by consumers who were offered cheap and easy credit terms. In the housing booms that we have seen during the last three decades it has been the rapid turnover of houses and all the work and services that were generated during each housing transaction that kept the economy buoyant. Most people when moving into a new house during the boom years would never think twice about ripping out the kitchen and replacing it with a new one as well as carrying out further renovation works. This all created work for builders, plasterers, plumbers, and joiners etc who were employed to carry out these works. Unfortunately all the kitchen and bathrooms that were fitted were usually imported from the likes of Germany and all the white goods such as fridges and freezers were also imported.
The booming housing market also created extra work for Estate Agents, Building Surveyors and all sorts of trades allied to the housing market such as damp-proofing and timber treatment and it was not uncommon for single houses to be have had chemical damp-proofing and woodworm treatments carried out several times over the course of a decade just to satisfy Building Society requirements for a guarantee against rising damp and timber decay.
The boom rapidly turned to bust with the near collapse of all the main banks and now that they have been rescued by the Government and the taxpayer they are now reluctant to lend any money to businesses and private individuals and have hoarded all the money that has been given to them in the form of Quantitative Easing.
With the housing market probably dead for the next twenty years or so as Banks revert sensible lending that was last seen in the early 1970s, the Building Industry has ground to a halt and along with it a lot of support services and as we are country whose manufacturing base has been steadily shrinking for the last 40 years there is basically no work around. To make things even worse the Government is slashing public spending and forcing thousands of public sector employees on the dole, even the ones who are lucky enough to keep their jobs often have to forgo any wage increases for the foreseeable future.
Yet Cameron and Clegg seem convinced that we are on the road to recovery but they couldn’t be further away from the harsh reality of life in the real world today. Now that most of the population see that there is little hope of any Government help they have resorted to basic human instincts and battened down the hatches and stopped spending. With food and fuel prices rising on a weekly basis and wages not rising the disposable income for common people is falling and this has put a brake on the growth that is predicted by Cameron’s advisors.
Take a walk down most high streets and you will see boarded up shops and empty streets, nobody is spending as they have no money. The only places that seem to be thriving are pawnbrokers and bookies while healthy eating has also taking a backseat as people seek comfort in fast food from MacDonalds, KFC and the lovely pasties served up by Greggs.
It’s still not too late for Cameron to make a U-turn and start spending again to get the nation back to work. I don’t mean by reversing welfare payment cuts to dole scroungers as these are long overdue but by spending on capital projects and improving the infrastructure of the country. Instead of paying the unemployed to sit at home watching daytime TV he should create jobs which would give people a living wage and reduce dependency on benefits. He should also raise the tax threshold to take low paid workers out of tax altogether. Clegg intends to raise the threshold to £10,000 which will help a little bit but it is not enough and it should be raised to £20,000. This would cost money as it is likely that millions would no longer be paying tax but on the plus side it is well known that lower paid workers tend to pay as they go and spend most of their income as fast as they earn it which in turn boost the economy and help money start to flow round the system again.
One of the first places he could start is in London. We are hosting the 2012 Olympics next year and while it looks like the athletic stadium and other major venues will be completed on time the surrounding areas are little more than shanty towns. I was in Forest Gate a week or so ago carrying out a damp survey and wandered down to Stratford which is the main town for the Olympic Games and apart from the new Westfield Shopping Centre the place is a complete mess. Whoever is in charge of this area be it Central Government, Boris or LOCOG then they should get something sorted to tidy the place up. There is a vast army of unemployed people in the area and a lot of them would be willing to work for decent wage and in the long run the Government would save by reducing benefit payments and hopefully getting an increase in VAT revenue when this newly employed workforce start spending their wages in shops and pubs. There are countless other areas up and down the country which would also benefit from a bit of money spending on them but Cameron insists there is no spare money after doling out billions to the banks with his QE programme yet he can still lavish millions on the Royal Wedding and fund pointless wars in Afghanistan and Iraq.
According to Government statistics the economy grew by 0.5% in the first quarter of this year and we won’t have long to wait for the results for April-June but my prediction is that growth will just be around the same mark or even slightly lower . Nonetheless Cameron, Clegg and Cable will proudly announce that the economic recovery is continuing but after taking inflation of around 4% into account this is reversed into negative territory and we are still firmly in the midst of the Never Ending Recession.