Bigger bounces
The problems facing any new government in the near future are illustrated by today’s GDP figures. Not just the months figures but the longer trend which is characterised by low growth one month, then a slight contraction the next, then maybe some more growth again.
This bouncing along the bottom is probably inevitable given the inflationary shock of the war in Ukraine but it has been going on far too long to be just down to that. The UK should be looking at bouncing back to its long term trend, of maybe 2.5%. But no one thinks that is going to happen.
Without that growth nothing is really affordable, it explains why the tax take is so high and the government has so little money, it explains why defence spending is again to be cut, why education and health spending have been cut in real terms for years.
External shocks are unavoidable and more common these days, but economies are supposed to bounce back to higher growth.
The UK’s economy is like a basketball that has been left to bounce on its own, lower and lower until it just rolls along the floor.
This means a slow drawn out decline, it has to be reversed.
The current government is not even trying.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
By Jonty Bloom Media