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Friday, 15 August 2014

Perspective

The newspapers have been rather gleeful in reporting the facts that the German economy declined by 0.2% last month [and France flatlined] while retail prices in France and other Eurozone countries were falling.. The implications for Britain were seen as unhelpful, however; because the EU as a whole takes more than half of British exports; so any decline in demand in the EU  is a potential for decline in the UK economy.

Meanwhile the number of EU citizens working in the UK continued to increase over the past year. While the proportion of the 787,000 citizens of the pre-2004 members states declined by 1% in the UK workforce, the number of citizens of post-2004 member countries working in the UK increased by 25% in the one year [mostly Poles, Czechs, Slovaks and Hungarians, rather than Bulgarians or Romanians] bringing their number to 867,000. So the UK remains a beacon of hope and a land of opportunity to intelligent, qualified and generally hardworking young people.

Also in the available workforce are unprecedentedly large numbers unemployed and inappropriately employed of UK graduates: unfortunately qualified in the subjects for which there is no demand and often inculcated with a culture of idleness which emerges from spoonfed learning processes.  The fact that a major component of the available native workforce is unprepared for economically productive employment is depressing, and contributes to a developing consensus that Britain is trapped into a cycle of declining wages and depressing trade prospects.

But this is not inevitable.

Britain continues to be highly generative of inventions and innovations: and it is common knowledge that there is a failure of channels for funding innovative products and exploring new markets outside Europe. The crazy scheme to focus infrastructure spending on a fast railway to Birmingham - where the existing journey time is only one hour and twenty minutes - while shelving the opportunity to spend smaller amounts of money on massive transport improvements between the traditional - and continuing - centres of industrial and academic research of northern England is the apogee of ineptitude.

When Harold Wilson's version of new labour came to power in 1964 they promised to bring in a new economic era based on deploying the "white heat of technology", and by 1968 the Deputy Prime had led a high-powered team which produced a comprehensive national economic plan. It was published at the time when the failure of the existing economic policy led to a crisis in Britain's balance of payments and a forced devaluation of the pound [from $2.80 to $2.40]. The Plan was shoved into the bottom drawer and the usual round of spending cuts and defensive tactics was put in place: and so the depressing trend of the UK was re-set for continuance until the present day.

The details of the 1968 National Plan would not be applicable today; but a revolutionary revision of  the foundation assumptions underlying economic failure must be made. This really is urgent.

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