Comments: No swansong, more a damp squib

I think Labour and the media are underestimating the anger felt by OAPs at their treatment in the budget. This is the one group in society that does not think being deceitful is clever. As the facts emerged about the penny-pinching nature of the bus pass and the crude bribery of the one-off council tax bung it was increasingly clear that Gordon Brown’s budget speech was just as deceitful as the dodgy dossier.

If it’s governments that lose elections, this one is certainly giving it a good shot.

Posted by David Sandiford at March 21, 2005 02:11 AM

“Retail sales in decline”

Surely the point here is that they’re supposed to. It’s not that retail sales are declining from a ‘normal’ level but from an excessive level funded by borrowed money.

Retailers and manufacturers won’t like it but retailers should cut costs and manufacturers should get out more and export. It’s not as though they don’t know a decline in consumer spending is coming.

The US Fed. will raise rates this week and the MPC should do the same in April - to cut borrowing and encourage saving. There’s no point in having an Indian summer for borrowers at this stage.

We’ll see the CPI figures for Feb. this week and the MEW figures and Current Account figures for 2004 Q4. Let’s hope they don’t give consumers a false sense of security.

Posted by David Sandiford at March 21, 2005 02:46 AM

manufacturers should get out more and export

What? and compete with China India and Eastern Europe - thats what Germany is doing rather unsucessfully.

It's service providers that need to get out and export if standards of living are to be maintained.

Posted by giles at March 22, 2005 06:38 PM

I was really thinking of manufacturers’ survival rather than the good of the economy – as UK manufacturers won’t have a binging home consumer to depend on any more.

But the point about service providers is spot on – a point President Chirac seems well aware of. This was the week the EU was supposed to fling open the door of service sector competition, only for Chirac to put his foot behind it.

Mind you, given the state of the UK education system and the British genetic inability to learn a foreign language the chances of Britain exporting services to Europe are probably pretty slim anyway.

There’s been lots of interesting economic news this week.

I’m not impressed by the Feb. inflation figures being unchanged from Jan. It looks as though retailers couldn’t shift their stock in the Jan. sales and had to keep sales prices through to Feb. But those price reductions will be removed in March – especially for furniture.

Even so, it looks as though any interest rate rise will be delayed until May – in spite of the US rate rise and two members of the MPC voting for a rise in March. The very interesting BoE Agents’ Summary of Business Conditions for March is here:
http://www.bankofengland.co.uk/agencies/agsum05mar.pdf

The current account figures came out looking respectable on the surface. But the positive investment income just masked the terrible trade deficit. Maybe we really should all become a nation of day-traders.

Or hamster breeders – the changes to the inflation index constituents were amazing. Chiropractors are in - but not a session at the nail-painting salon (the last chance salon). It can only be a matter of time. This is what we’re coming to.

Posted by David Sandiford at March 24, 2005 07:58 AM