Budget 2011 - first reactions

As has been pointed out, the big Budget themes were announced in June and October last year.  The problems George Osborne faced making this Budget was that economic growth turned negative at the end of last year, the deficit is forecast to grow larger as a result, and food and fuel prices are higher prompting the Bank of England to consider raising interest rates.  In essence, he ignored these issues apart from a reduction in the fuel duty levy.

Plans for growing the economy, despite being contained in a 131 page document, seemed to contain little that was new and the Office for Budget Responsibility was not willing to suggest they would raise the long run trend rate of growth (though that's not really surprising since the plans focus on the conditions for growth rather than direct intervention).  What growth proposals that were contained in the Budget statement seemed to have little in the way of a theme connecting them.

The Budget contained little if any mention of the hardship that will be caused by the spending cuts and the continuing level of unemployment.

Labour's initial response has been along the right lines.  Shadow Chancellor Ed Balls apologised for Labour's approach to bank regulation.  He also focused on the risks Osborne is taking with the economy.  We are talking about a leap of faith by the government.  Labour still has work to do to offer a clear economic platform but we are getting closer.

Stephen Beer, 24/03/2011

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Latest UK jobs market figures

The latest UK jobs market figures make grim reading, especially when considering young people new in the jobs market.  The overall unemployment rate has ticked up to 8.0% (from 7.9%) in the three months to January (the claimant count fell in February).  The number of people unemployed aged 16 to 24 is 972,000, the highest since records began in 1992, an unemployment rate amongst young people of 20.6% (again, the highest since 1992).  At the other end of the spectrum, the number of people over 65 in employment is 900,000 (highest since 1992).  Recessions make it difficult for those with little work experience to find work.  That is why targeted help is required because otherwise the nation loses out, in addition to the individual benefit that would be received by a pro-active government.  Unfortunately the Tory/Liberal government seems to have little idea how important this is, even in purely economic terms.

Bonuses inflated total pay growth but without that the increase in regular pay was 2.2% pa (three month average to January 2011), down from 2.3%.  The public sector still saw wage growth, at 2.5%, ahead of the private sector at 2.1% (both excluding bonuses).
  The overall picture from this monthly snapshot is essentially that little has changed. 

The OECD downgraded its forecast for UK growth in its latest outlook.  It remains supportive of the current austerity measures and states that the outlook for jobs is that 'Unemployment is expected to remain above historical averages over the coming two years, with low-skilled workers and youth particularly hard hit.'  The resignation inherent in these words is clear.  We need an alternative.

Stephen Beer, 17/03/2011

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Economic credibility is key

It was good to see today Labour launch proposals on the economy ahead of next week's Budget.  It is right to ensure the focus is on growth and not just on austerity.  Labour has also announced a review of business and enterprise policy.  These announcements demonstrate that Labour is serious about engaging with the debate about the future of our economy.  As we review our policies, we need to remember that credibility on the economy is key.  That means we need to think through just why that credibility was damaged and how, at a deep level, we can rebuild it.

Stephen Beer, 14/03/2011

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