Political boffin, keen fisherman looking forward to retirement.

Thursday, April 19, 2007

There May Be Trouble Ahead

Anthony Hilton in the Evening Standard yesterday provides an interesting insight to the growing concern amongst city analysts that the wheels might just be about to come off the UK economy. With 'official' inflation even topping 3% and an expectation that interest rates might well top 6% in the very near future, Labour's handling of the economy is fast becoming politically problematic. With things in the US not looking too clever, concerns are inevitably heightened.

I have long argues that Brown has been a chancer, he has deliberately changed the goalposts and gerrymandered the economy to ensure his short term goals are met. Economies such as Wales' traditional manufacturing base have been abandoned by Labour as the City has been let to go hay wire destabilising the long term prosperity of the whole economy. (Its little wonder that wealth levels in Wales have collapsed by 6% in the last 10 years compared to the UK average). The end result is an economic legacy built on sand - correction is inevitable sooner or later.

The concerns are outlined by Hilton as follows -
  • a massive balance of payments deficit
  • low productivity
  • poor state of education
  • dependence on the public sector for job creation
  • unprecedented levels of personal unsecured debt fuelled by unsustainable house prices
  • the reliance on the City to drive UK growth based on mispricing of risk and quasi-monopolistic extraction of fees and bonuses

I could add

  • growing north-south divide
  • loss of over a million manufacturing jobs
  • growing individual wealth inequalities

Hilton argues frighteningly that the whole UK economy is basically one giant hedge fund - a massive one way bet on financial services. Brown has put is eggs all in one basket with no plan B.

The relevance of all this to us in Wales is we desperately need a change of Government on May the 3rd so that we can have a change of approach that develops our indigenous businesses using the opportunities provided by convergence funding in particular in our poorest areas. The clouds are gathering and we need to develop our own plan B in Wales.

Brown is coming to Wales tomorrow. The political illiteracy of Rhodri Morgan and so called Welsh Labour is that they view this 'Son of Thatcher' as an electoral asset. I'm sure the people of Wales are delighted to get a visit from the man who has been responsible for making us the poorest part of the UK.

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