It’s budget time. Austerity has severely damaged Britain’s physical and social infrastructure. Coupled with a fall in real wages, austerity has shrunk Britain’s social wage. No wonder British voters are angry and disillusioned. So let’s examine the case for a £50 billion spend. For the NHS, local government, central government services, and unfreezing benefits…
It can be done within the levels of expenditure considered acceptable during the Thatcher era. All it takes is political will – and the overturning of the ‘Treasury View’.
The calls for a “People’s Vote” on the government’s proposed Brexit ‘deal’ (if indeed there is one) grow louder, but are especially contentious for the Labour Party, whose membership is more minded to “remain” than the public at large, which still seems fairly evenly split.
But the call for a People’s Vote is not so straightforward, partly now in terms of timing and Parliamentary arithmetic, but above all since it poses the tough question – what question to ask the People to vote on? Or indeed what questions, plural?
Ten years ago the bursting of private debt ‘bubbles’ – most obviously in the US, UK and on the periphery of the EU – woke policymakers to the importance of balance sheet dynamics. Today, commentary by international organisations has ongoing rises in private debt as a key risk to global outcomes.
Over the past decade in advanced western economies, the rate of improvement in prosperity has ground to the lowest point of the post-war period.
It is argued in this article that productivity has been the result of aggregate demand rather than supply conditions. And that the strength of demand follows global monetary conditions that are the result of deliberate policy interventions.
It’s good to see the latest (21 December) New York Review of Books give space to a review – by Robert Kuttner of American Prospect– of a biography of "Karl Polanyi: a Life on the Left" by Gareth Dale. For as we have been arguing for a long time, it was Polanyi who better than any other historian / analyst got to the heart of the contradictions of free market globalised liberalism, and saw that it was such economic liberalism, pushed too far, that is likely to lead to authoritarian, or even fascist, outcomes.
This is an extract from a chapter in Economics For the Many (Verso, 2018) edited by Rt. Hon. John McDonnell MP. The chapter was written in August, 2017.
If we are to secure a sustainable, stable and liveable future for the people of Britain, then implementation of the Green New Deal will be vital. Not just for the sake of the ecosystem, but also for the sake of rebuilding a stable, sustainable economy. A sustainable economy will be one dominated by a “Carbon Army’ of skilled, well-paid workers.
The biggest danger facing the British economy is this: at their meeting in May the Monetary Policy Committee of the Bank of England is very likely to raise rates – despite a warning from the governor - because of the ongoing fear of inflation. Raising Bank of England rates at this point of fragility, would be like deliberately and repeatedly pointing a sharp dagger at a bubble of household, corporate and financial debt.
In her new short book, Rachel Reeves reflects that the economic winners of globalisation “are asset rich elites and the metropolitan professional class of creative, media, knowledge and finance workers, and opinion formers.” Her major concern is for Britain’s “old established working class, many of whom are now excluded from high-skilled sectors”.
“Purposeful and dignified work defines what the Labour Party stands for, whilst good wages are the principal means of distributing the rewards of economic prosperity,” she writes.
Publication this week of the Taylor Review of Modern Working Practices was followed on Wednesday by the latest monthly employment stats from the Office for National Statistics (ONS). These tell us that the number of those in work continues to rise significantly, but that real wages are falling at their fastest rate for nearly 3 years. Yet the CBI claimed in its submission to Taylor that over decades, the UK's flexible labour market has given rise to strong growth in real wages. In fact, the opposite is true.
The latest GDP figures for Greece, relating to Q4 of 2016, are disastrous. For Greece first and foremost, but also for the credibility of the EU and IMF's failed harsh austerity (but on the EU side no-debt-cancellation) policy. Far from evidencing the long-promised recovery, they show a new decline in GDP – both on the previous quarter (after seasonal adjustment) and year on year.
It’s the European Commission’s season for receiving a harvest of draft budgets for 2017 from all the Eurozone states – and if need be rejecting the promised fruits. The trouble is, the Commission is a particularly bad judge of the quality of economic ‘fruit’– because its testing gear (it effectively measures only inflation, budget deficits and public debt) has no way of judging the quality of what is being put to it. Take the example of Spain.
Working people in the UK have good reasons to vote to stay in the European Union, but not for the same reasons as the government or the reports from the financial sector and neoliberal think tanks suggest. Business reports, even when they endorse a “yes” vote, claim that Britain is better off without the EU directives which protect workers’ rights, such as the Working Time Directive or directives for paid leave, equal pay, and paternity leave.
When they say “Britain is better off” without these regulations, they mean that the employers are better off and the workers are worse off. The TUC has demonstrated clearly the risks of Brexit for the rights of working women and men.
In his contribution to "the Cracks Begin to Show: a Review of the UK Economy in 2015", Jeremy Smith looks at the development of labour productivity. Unlike the dominant supply-side approach to productivity (which remains important for the long term), data show that it is demand and economic activity that drive shorter term changes.
The government is caught on the horns of a dilemma. Should it celebrate the (real but skimpily-remunerated) increase in employment over the last 3 years? Or see this as the result of a dysfunctional low productivity economy, increasingly of its own shaping?
“This young country will be proud of its identity and its place in the world, not living in its history, but grasping the opportunities of its future.”
Tony Blair: Leader’s speech, Brighton, 1995.
Tony Blair and those associated with Blairism embraced globalisation and studiously ignored Labour Party history - except to denounce and disown “Old Labour”.
It is a truth universally unacknowledged that, beneath their respective cultural veils, the British and the French are really quite similar. This is reflected in their demography and economics. But in one area the two countries diverge sharply – in labour productivity. Here, France and the UK have taken very different paths to achieve, in effect, an almost identical end result. What unites the two countries’ economies is a lack of demand and economic activity sufficient to generate full employment (especially in France) at reasonable wages (especially in the UK).
If you want an example of absurd economic claims and false logic in the lead-up to the UK General Election, look no further than the letter to the Daily Telegraph by "senior business figures" in support of the Conservative Party, published (aptly) on 1st April. Inspired by the boldness and breadth of their logic on the "result" of the "flagship policy" of lowering corporation tax, I wrote my letter on behalf of PRIME to the Financial Times, which was kind enough to publish it last Saturday 3rd April, below.
Correlations do not necessarily imply causation, as we know, but we can indeed see a strong correlation between areas that voted for Marine le Pen's Front National in the recent European Parliament elections, and areas of high unemployment in France. This in itself is no surprise, but the geographical correlation - though not perfect - is striking. and it is hard not to conclude (as I do!) that the combination of Eurozone and French economic policies over recent years that have allowed GDP to stagnate high and persistent unemployment to perdure - for too long in too many regions - is a major factor in the growth of electoral support for the Front National.
Today was a busy day for employment related statistics, with the Office for National Statistics (ONS) publishing its monthly bulletin and set of data. And overall, it’s still a fairly good news story on the employment front, with those in some form of employment rising, and unemployment falling to 6.8%*, the lowest since early 2009.
Back on 19th March, we pointed out (“The Great Leap Forward of the self-employed”) that something odd happened in the UK labour market in recent months. The total workforce grew over the last year by 459,000, and over the last quarter by 105,000. But over the last year, the number of employees has risen by 198,000, while the number of self-employed has leapt by 285,000 – a huge 6.8%.
It was a busy week, statistically speaking, with the UK Office for National Statistics (ONS) issuing their latest raft of data on the labour market and unemployment, as well as the latest inflation statistics. It got us tweeting quite a lot, so much in fact that we did not get round to posting it all on our PRIME site.
The full cohort of Labour Market statistics came out today from ONS, summarised in their usual helpful Statistical Bulletin. As part of our assessment of the UK economy over the life of the present government, we thought it would be interesting to compare the current figures with those of the summer of 2010, to see what significant changes have taken place.
Another European Central Bank Governing Council meeting, another occasion for complacently doing nothing. No matter that the Eurozone unemployment rate has reached 12.2% in April 2013, compared to 11.2% in April 2012. No matter that unemployment is in double figures (as a %) in over half - 9 out of 17 - of the countries of the Eurozone, including three of the four largest countries (France, Italy, Spain). No matter that Eurozone GDP has fallen in each of the last 6 Quarters. The ECB washes its hands of the problem.
In a recent article on the Guardian website, PRIME’s Ann Pettifor said:
“The deficit and debt/GDP ratio fetishes that unite the UK government, UKIP, the European Central Bank and the European Commission are part of the economics of the poorhouse, where co-ordinated austerity is seen as a "solution", even while unemployment reaches mass levels unknown in Europe's modern history. Let's remember why Keynes wrote his General Theory of Employment, Interest and Money: in sum, employment must come first, the rest follows.”