KNOWLEDGE
To understand what's going on in the economy at the moment you need a basic understanding of economics ...which I don't have!
INDICATORS
What's needed is to understand the relation between GDP growth, productivity, employment and wages, inflation, interest rates and the supply of money and credit.
With this knowledge you can build wonderful models of the economy and pretty little gearings linking the chains of cause and effect.
Without this knowledge, we are left swimming in a pool at night.
GOALS
We can say that what we want is strong growth and low employment on the one hand and a suitable inflation rate on the other.
PROBLEMS
What's stopping the UK is:
Low productivity - stagnated since the financial crisis and one of the poorest in the G20.
Low investment - Brexit, covid-19 and the war are all huge disincentives for businesses to invest in, for example and especially, new technology.
Low growth - As a result of poor productivity and low investment, calculates the OECD, the UK will have the lowest growth rate in the G20.
Burdensome taxes - The share of government tax take in the GDP has been increasing since the nineties and increasing strongly with those three brexit covid and this war.
POOR RESULTS
But how has this increased burden helped us? Because the NHS is still in an awful state and declining health care and welfare, and education is failing the country, and the cost of living crisis puts further pressure on Social Security spending.
Low wages - It hasn't helped real income which is pretty much unchanged since the financial crisis. If you thought cutting off labour from Europe would raise wages locally, you'd be wrong - stagnant productivity and bargaining power have meant wages have grown patchily at best.
Real wages means wages net of inflation and so the supply problems caused by covid and this war raise inflation and reduce real wages.
Industrial action - And now we have industrial action with for example transport staff going on strike and doctors quitting their posts.
Devaluing currency - the currency has devalued by 16% since Brexit and that has resulted in more costly imports just adding to home inflation. This devaluation has not helped with the spiralling cost of energy, imported food and resources.
Devaluation is supposed to help exports, but there's little evidence of that I don't know why.
Record public debt - how much longer will lenders support public debt? Who wants to invest in this economy previously that would be buying up of assets developed in the UK and saving in UK Banks It was over 8% of GDP in the last quarter and yet according to Maastricht commonsense, it's supposed to be 3%.
But this is an obvious contribution to perhaps hyperinflation.
And reduced capital flows in put further pressure on the currency.
STRATEGY
What should be done about all this?
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