In the Daily Mail, David Laws gives readers a tour d’horizon of the economy, ending with some optimisim:
The first good news is that inflation should fall – and steeply. Last year, inflation rose because of higher energy and food prices, and the rise in VAT.
Most of those increases are behind us – last week, energy price cuts of five per cent were trumpeted. Inflation, which peaked last year at 5.6 per cent (retail prices), should be down to about 2.5 per cent by May.
That will help hard-pressed household budgets.
The second piece of good news is that the Government has now delivered most of its bad news.
It is unlikely there will need to be any significant further tax rises and the tax-free personal allowance is due to rise by £600 this April – helping every taxpayer.The third cheering fact is that interest rates and the pound look likely to remain low, thus helping people to pay off debt, and businesses to export
Finally, while the eurozone is a complete mess, growth elsewhere has been better than expected of late, particularly in the US.
The other good news, he reports, is that the Chinese are buying our Rollers by the shedload!
The full article can be found here.
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10 Comments
………………………………Most of those increases are behind us – last week, energy price cuts of five per cent were trumpeted. Inflation, which peaked last year at 5.6 per cent (retail prices), should be down to about 2.5 per cent by May. …………..
A great example of wishful thinking…The trumpeted ‘energy price cuts of five per cent’ was analysed in a Radio4 programme and, guess what, the vast majority of gas and electricity users don’t benefit by much (if at all).
“the tax-free personal allowance is due to rise by £600 this April – helping every taxpayer.”
While it’s correct for the reduction in personal allowance to be trumpeted, it’s not factually correct to say it’ll help every taxpayer as the higher rate threshold is reduced to compensate. The measure is therefore designed to help the basic rate taxpayer and as such is an example of the Lib Dems bringing progressive policies into the coalition programme.
Jason, t6hats willfully inaccurater the Radio 4 programme highl;ighted that the 5% was an average figure and therefore not universal, it did not say that the majority of people would not benefit at all….
inflation will coem down
“…and i might be back in the Cabinet by december!”
…………..it did not say that the majority of people would not benefit at all……………It, and I said’, “the majority would not benefit by much, if at all”…
British Gas has 12.2M customers..In its statement it says “5M customers will benefit”‘
Furthermore, British Gas said it would not be reducing gas prices. However, the 5% reduction in electricity prices comes after British Gas raised prices twice in the last 12 months. In December 2010, it raised both gas and electricity prices by 7%. In October 2011 it hiked electricity by a further 7.2% and increased 5 million customersgas by 15.7%.
In November EDF put up its gas prices by 15.4% and electricity prices by 4.5% it says it will not reduce electricity but only gas…
Sadly, no mention of growth strategies. Perhaps David is handicapped by his banking paradigm, which is one constantly taking advantage of market conditions as opposed to influencing or creating healthy markets – which excludes CDOs.
Although the “bad news” has been delivered and out of the bag in year one, most of the key public services and welfare cuts… (probably around 70-80-% of the deficity reduction cuts) which get felt the most by those at the bottom of society have yet to come into effect and will kick in really hard in the 2013-14 financial year and which will involve another big round of public sector lay-offs also….optimism about restoring growth to over 1% in the next couple of years has to be tempered by a realism that unemployment will continue to rise, and access to public services and benefits, will continue to decline up to the next election.
Politically, I feel it is our Party that will pay the price for this in the polls, whilst the tories will reap the electoral dividend of any increase in private sector growth – and given the delayed effect on real deficit reduction there will still be the same massive gap between Government revenue and borrowing..
“given the delayed effect on real deficit reduction there will still be the same massive gap between Government revenue and borrowing..”
Indeed, one can almost imagine a mechanism whereby cutting public spending too deeply could be counter-productive, and might actually increase the deficit rather than reducing it. One can almost imagine that it might be a matter of some subtlety to estimate the optimal level of public spending – even setting other considerations aside.
But we’re continually being told it’s all very simple, there is no alternative, and so on, so these must be delusions…
Pull the other one, it has got bells on. You can’t keep saying that every year.
Unfortunately it”s true.
Tony Greaves