Economic Prospects

It seems a while since I have talked about the economy, and economics is one of the most fascinating subjects for me.

You may have noticed that the recent quarter GDP growth rate was 1.1%, way above expectations, and the fastest quarterly rise I believe since 1999.

For me, this would not have happened, had we elected a Labour government, who had lost the plot completely with regards to business and economics many many years ago, and lost it further still during the recession (ie rescuing the banks – why reward a bank for doing so much economic damage by rescuing them?  Politics, dear sir.), companies that are head-quartered in the UK would have thought twice about staying, as would their talented employees.

In fact, these companies clearly did think twice, they were waiting for the outcome of the election to see whether they should invest or not in the UK.  We gave them a good election result, an environment in which they can now do business again, and they give us jobs.

Despite the doom-mongers who are predicting a double-dip recession (which I believe would have happened under Labour), I would not be surprised to now see the rate of growth go even higher.

But there are problems ahead.

Inflation is higher than it should be, and despite that it seems all of the revered economists, do not care about it.  I’m not sure who Mervyn King thinks he is – I would like to know about his personal finances (ie mortgages, etc) as I believe as the head of the Bank of England, his policies have been damaging to our medium-term prospects, not only that, but he was in charge of interest rate policy during the boom which led to this bust – questions really have to be asked.  I read that he has been governor since 1997 (oh hello again Labour won an election that year didn’t they?) – surely a role as important as this should not be held for so long, this seems almost dictatorial.

Anyway, rant about Mervyn King over, I want to see an increase in interest rates and quickly.  Nothing too dramatic, but enough to give us leverage should there be further shocks down the line, as 0.5% does not give us any breathing space.

You cannot pump $200billion of new money into the economy and not expect inflation.  It is coming.  Interest rate changes take about 6 months to have an effect, and I feel that they need to rise now.  Only to 2% or so.

I really could go on forever, but this is just a little economic steam let off.  Phew, thanks.

Don’t worry, things are looking up, we have a good government now 🙂