Investors, banks, financial institutions, hedge funds and rating agencies, are all warning governments that austerity packages without a growth plan are self defeating. Something I have been advocating or some time. Unfortunately the UK Conservative led coalition, are too stubborn to do anything about it, preferring to model its tactics on 30 year old ideas.
They are now talking about doing a ‘U’ turn on child benefit, which was totally unfair and very heavily waited in favour of the rich, they have already done a ‘U’ turn on pensions, a ‘U’ turn on the fuel duty they had planned for January of this year, and are planning to force businesses to close with a 5.6% rise in business rates this summer. Their handling of the university fees was amateurish and ill conceived. The N.H.S. reforms were designed to push the N.H.S. into privatisation, although they are now doing another ‘U’ turn.
The coalition is expected to leave the country in more debt when they have finished bankrupting it, leaving a projected £1.3 trillion deficit according to the Office of fair trading.
It is widely assumed that most of Europe as well as the UK are now slipping
back into recession, and possibly a world wide depression.
France and Austria have had their AAA rating downgraded due to their banks lending to countries which may default, and because both France and Austria have high deficits, with no plan for growth or effective austerity packages. France and Austria were two of the six countries with AAA rating, who were expected to be able to borrow at low rates in order to help other struggling EU countries.
China was expected to help the EU, but with falling exports and increasing
inflation, this now seems unlikely. Chinas reserves have fallen, but they do hold a lot of foreign currency. There is a great deal of optimism that the City of London will join Hong Kong as an offshore centre where the Chinese currency, the Renminbi, can be traded. Talks between the Treasury and the Chinese have been making good progress. If this does happen it will be good for jobs in the City and will give a lot more prestige to London.
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Isolated : EU and UK Econony:
It is the same in many countries, Greece is in a predicament. Standard and Poors have downgraded most of the Euro countries and say that Aesterity is self defeating, as it weakens a country to much. With eusterity comes hob cuts, a fall in government revenues, and less likely hood that a government will be able to sustain debt payment. Auserity without job creation is a recipe for disaster and default.
ReplyDeleteI am in total agreement. It's commonsence really, but politicions don't realise that.
ReplyDeleteVic Farron