A Con-Lib Alliance is is then...probably

With fine details yet to be thrashed out, a Conservative - Liberal Coalition is undoubtedly going to be the UK's next government. Gordon Brown resigned (again) yesterday after saying he would resign in September anyway. I must say I feel a little sorry for Gordon as I feel that his resignation yesterday was his own decision, the one the day before was I am sure foisted on him as a last-ditch attempt at attracting the Liberals. No doubt a scheme dreamt up by arch-idiots Mandy and Campbell.. Only a few days ago, Campbell was trying to claim that Gordon had the 'perfect right to be Prime Minister'. Only the great unelected (Such as Mandy & Campbell) could believe a man twice unlected could legitimately hold the right to an elected position. At least that should be the last we see of them in the corridors of power for a while (unless you include the House of Lords of course).
I have long believed that the House of Lords holds a valuable place in UK politics, and that's probably because I don't have the great faith in 'Democracy' that the majority seem to have. However, since they put Mandy in there (what to do with a man you have sacked, reinstated and sacked again?... make him a Lord!!), I am that much more in favour of it's abolition.

So what does the future hold for the UK? Presuming that the EEC survives the growing economic volcano, it will be a period of cuts and protest, Cameron has acknowledged this right at the start. The real trouble starts if we are plunged into a second recession in the EEC bankruptcy fallout. If Greece and other teetering nations cannot be bailed out, there is no knowing what will happen. Looking at this purely politically, the labour party did not lose as many seats as they might have, and the liberals did not gain as many seats as they might have, so the door is still open for a reversal of fortunes if the coalition does not deliver what the electorate want. Economically, we are in for a tough time and that could also unsettle the electorate especially when the government clashes with the unions as it will inevitably do. The unions would do well to bear in mind that we are in the midst of hard times. The attitude of 'Unite' over the British Airways dispute is not likley to draw much sympathy. True, some privileges have been withdrawn, but in the light of dwindling revenue in the travel industry particularly, further pressure by the unions is unwelcome and unwarranted. Public service unions are going to clash with the goverment over cuts in services, but at the end of the day, we have to get the national debt back on to a manageable footing before we build up public services again. This next two or three-year period is not the time to cry over losing your increments and priveleges if you have managed to retain your job. Pay will be down, revenues will be down, employees that can't accept that, and still feel that their pay must be comparable with someone else's, run the risk of comparing someone else's pay with their dole money...
There is still a very real danger that this coalition may prove unsustainable when real pressure is applied, we wait to see what will happen.

A new direction?

UK General Election 2010
As new power axis begins to emerge, this election has delivered a hung parliament necessitating an unholy alliance to bring in measures that will require a strong and resolute governorship.
There are a number of observations we can make at this point, namely that this hung parliament does not look good for a time during which some unpopular policies will have to be endured in order to rectify the financial crisis. The financial crisis that we now face is a massive national debt, and a global economy facing uncertainty following the problems in Greece and the possible effects on the Euro - some commentators are even predicting a new recession following on immediately after the one we have just left behind us. Let's state for the record - anything can happen in a free economy - another recession is not as unlikely as it might seem, and this time...who will bail us out?
Domestically, we are hamstrung without strong Government. To be quite frank, right now my advice to David Cameron would be to make it look like you were trying to make a fist of it...then step back and let a Lib-Lab alliance actually take the parliamentary reins. A totally unsustainable government would then have a disastrous six months after which you could come back with a massive majority. I am very much bearing in mind the warning issued by the governor of the Bank of England that the next party to come to power will be so unpopular as to be unelectable for a generation.
This would be a costly and risky strategy, and I am banking that no politician can resist power even when it is likely to be hamstrung and short-lived.
There is no real danger of a Lib-Lab alliance however, I am personally of the opinion that the two losers of an election have NOT earned the right to rule. Like it or not, the fate of the country currently rests with the Conservatives having won the election without managing to 'win' a majority of seats. I use the term 'won the election' very deliberately - there is no doubt in my mind that the Tories have won, at least in the sense that they got the most votes and surely no-one else thinks there is another party that has won?
We will no doubt see a Tory/Lid Dem alliance take the reins, and maybe the labour party should prepare themselves to return to power when this alliance falls on it's face? I don't know how this can possibly work, however economically all three leading parties recognise there is a hard road ahead and spending must be reined in. In fact, when you think of it further belt-tightening domestically, coupled with the threat of national bankruptcy in European countries sounds like a certain recipe for a second recession close on the heels of the one we are just recovering from.
The period that is to come was always going to be hard.. a weak government (as a hung parliament surely is) will not have the backbone to administer the unpalatable medicine, and could well end up just offering a placebo.

Related posts:
Economic Fix?
Slow Recovery
End of Recession

Job market changes

Where are the jobs in 2010?

Figures were recently released indicating that 1 in 5 mainland UK workers actually worked for the Government in some capacity or other, and this is the area that shows the most growth. Jobs in the Environment Agency and the National Health Service, and local government planning and social services have risen over the past decade.
In contrast, as might be expected, traditional skills are on the decline. Also, competition in the electronics industry has seen manufacturers moving out of the UK. The knock-on effects have impacted many different job roles from Machinists to Quality Control inspectors. The shift in jobs has seen some de-skilling of the work-force with many employers now complaining that their employees are not sufficiently skilled to carry out their allotted tasks.
The percentage of state employed workers in Ireland has been reported as closer to 1 in 4, which I guess means that for the moment, jobs there are more stable. Government employment is a good thing when it comes to stability, and generally the State is a good employer. However the UK government has declared a pay-freeze as a result of the financial crisis, and this will have a profound effect on the economy.
A time of decline can often be a breeding ground for new small businesses to emerge, government needs to ensure that it creates an environment that encourages these new businesses to flourish.

Who will fix the economy?

With elections looming in the UK, the underlying theme remains 'How are we going to get the economy back on track?' and politicians are in an uncomfortable position.
The road to recovery requires expenditure which means that the electrorate will have to pay through taxes. Over recent decades we have become used to our standard of living steadily increasing year on year, the truth is, that if we want to repair our economy, we will have to make sacrifices. This is not a popular election cry and this is why no-one is willing to proclaim it publicly. The three major parties will try and sneak a victory (The Liberals are looking like a force to be reckoned with after the first live televised debate), and then bring in the taxes when they are settled into office. This tactic will needlessly delay the recovery, and all done in the name of democracy... Another way in which the agony will be prolonged is the increased likelihood of a hung parliament and Gordon Brown was visibly 'cosying up' to Nick Clegg on the live TV debate seemingly preparing to pal up when there is no outright winner in May...
My primary concern as ever with this 'democracy' that we enjoy.. is that the first objective of the political party is to get itself elected, any real decisions that are going to help the economy (as opposed to policies that will placate the voters) get booted to the back of the room.
We wait to see what promises will be made and broken whilst the economy gets on with with fixing itself...

On the slow road to recovery

There is no way that this existing financial crisis is going to blow over in just a few months, there are hard times coming as the huge Government cash injections need to be accounted for. Of course, the Government pays for nothing and if they were to lose the coming election (which looks at least possible at the moment) then the tax-payers will still be picking up the bill whilst the politicians are still arguing about their expenses (there are apparently more expenses revelations on the way..).
Having said all that, there are indicators that the economy itself has hit rock-bottom and is now crawling it's way back up with a degree of determination. Figures for GDP released early have now proved to be slightly pessimistic and have been amended. Output growth figures are reportedly the highest since 1994, but it is worth noting that when you hit rock bottom, the only way IS up after all...

RBS issues bonuses again

The headlines are damning in themselves - Bank makes over £5bn loss and issues over £1bn in bonuses, but to be fair the reality is not as simple as that. The trading arm of the bank made a significant profit, keeping the overall loss down to a mere £5bn... and the bonuses were given out only in this section. However, I can't help feeling that an entity that is 84% owned by the UK government is morally obliged to lead the way in moderate bonuses instead of forking out a million to each of 100 single employees.
In fact the CEO of the bank had the good grace to decline his own bonus and that in itself tells us something. He has grasped the concept that this type of reward is obscene in the view of normal people, so why is it that this culture is so well established that we cannot stop it?
My argument is that if performance-related pay is unavoidable - who is it that pays out when their arm of the business makes a loss?
The only answer is that the people who are taking these bonuses are:

1. under the impression that they are irreplaceable
2. will jump-ship if they are not given obscene amounts of money
3. are only willing to work for obscene amounts of money - ie. do not believe in the principle of a fair days pay for a fair days work, and are not willing to share profits with any other part of the organisation for whom they work.
4. are under the impression that they are personally responsible for every success of the company, but not responsible for any losses.

This is normal in the 'city' granted, but it is more difficult to swallow when the facts of the matter are put somewhat differently. These bonus fat-cats were no doubt the first to whine for Government intervention to save their precious firms, but the last to want to lend a hand now they have been rescued from the horror of a life of working for a normal wage. They are straight back on the horse demanding satisfaction in the form of un-earned sacks of cash.
I am largely against regulation, but I do think there has to be some balance in the way that vast amount of cash is handed out to a very small selection of individuals. On the other hand I am all for responsibility, if losses are made I want to see some claw-backs from the hay that was made whilst the sun shone... I believe,the only way that these types of payments can be made acceptable, is if:

• more of the money is made available to even the lowest of the low within the organisation, it should not be reserved for the 'elite' because without the 'grinders', the top dogs wouldn't get anywhere.
• where a bonus equal to more than the lowest salary is 'due', it should be paid over five years, if in subsequent years, losses are made, the remaining unpaid bonus is offset against losses.

Only with these type of measures can bonuses be considered acceptable by the general public.

Saving money in the recession

There are any number of useful online resources for saving money in the current economic decline. These range from helpful sites like MoneySavingExpert.com to comparison sites which help you to not only get deals on insurance, but to reduce your weekly shopping like with 'MySupermarket' which allows you to compare the major retailers.
Another helpful site is the Energy Saving Trust website which helps you to reduce your energy bills as well as giving information on grants and offers. There are sites like Kelkoo which compares retailers of electronic goods, Quidco is a site that gets cashback from retailers across the board, and MyVoucherCodes features deals and discounts from both online and offline retailers.
All these sites are worth checking out if you are serious about shaving some expenditure from your personal budget - I have not supplied links (they would have to pay me for that!!), but doing a quick online search should take you to the relevant sites.
I have a couple of other sites that you may also find useful, PetrolPrices.com allows you to search for the cheapest petrol and diesel in your locality, and Freecycle is a site that works along the lines of the old 'SwapShop' TV programme.
Let me know if you have any other suggestions for sites that have genuinely helped you to save money. (Please don't suggest sites for cheap viagra!)

Related posts:
the decline of my debt
how to get out of debt
Are we in too much debt?
credit card warnings

Bank distances itself from Government

I believe that it was during the Thatcher reign that the Bank of England formally became independent from Government, yet the BoE and Treasury have naturally continued to seek unified responses to the economy. As we enter the run up to an election in a few months time, the BoE is caught between whether to prepare for a continuance of current policies or a new broom sweeping through. The only sensible approach to take is to keep a watching brief, hence interest rates remain unchanged, and it is widely expected that the government-inspired asset-buying program will be put on hold.
Analysts agree that it is likely that interest rates will remain low for at least until the end of this year, as it is likely that the bank will want to establish a convincing upward trend in the economy before allowing interest rates to rise.
The opposition are promising their own fiscal package if they gain control after the election, and the government will probably present a budget in March, either measure is likely to tighten policy after some of the 'loosest' fisacl policy ever seen... The general outlook, despite the statistically positive rise in GDP, is cautious if not downright glum. GDP did not rise anything like as much as was hoped and inflation has taken a hike over Christmas - this will not be helped by ceasing of the VAT 'holiday'. There are still tough times ahead despite the encouraging signs.

Popular Questions:
How long will the credit crunch last?
UK bank rate drops to 1%
Economic meltdown
Are we in recession?

So the Recession is over?

It's officially over... statistically we are no longer in recession. So why is it that the economy is still repressed, jobs are hard to find and money is hard to come by?
It's simple really, recession is merely a comparative measure - it only looks at productivity compared to last quarter. Now we have been in this recession state for a long time (the longest sustained period of recession for fifty or sixty years), so that means productivity has declined quarter on quarter for an entire year or more. An upturn is good, but a small upturn is actually little better than a leveling out of the bad times - we have sunk so low, but things are not going to get any worse (on average) for now. That scenario whilst generally positive should not be mistaken for a return to how things were - I'll say it again.. it just means that for now, things aren't getting any worse. For a proper recovery, best estimates are in the region of two years or so before we can effectively put this recession behind us and get 'back on track'.

Naturally, some politicians will pick up on the positive signs and try to paint a rosy picture, but the reality of slashed jobs, and static wages is the best that most of us can hope for for the next couple of years. I know I tend to paint a grim picture, but there is good reason. There are people sitting at home wondering why, if the recession is over, they are staring at house repossession and little prospect of work. I don't think it is right that the people who have suffered, and are yet to suffer as a result of this financial crisis should be overlooked in our eagerness to announce the end of recession like it were an event to be heralded. Sure the end of the decline is to be welcomed, I only hope there is enough of an economy left to build productivity back up again.

Related posts:
Is there really a credit crunch?
Is this a recession?
How long will the credit crunch last?
UK reports GDP decline

Debt Update

Over the years, I have documented how I have brought my own credit card debt down from about £7,000 to round about £1000. I did this using will-power and 0% credit cards, the first of which was a Virgin credit card which had a 16month offer. The trouble is that now it has come down to 'manageable' levels, the debt is threatening to get out of hand again...
At the lowest point last year, the total debt was down to about £600, and now that I no longer have a 0% interest credit card, the total is slowly creeping up again, and I am once more paying interest... albeit very small amounts.
If I am going to completely eradicate, this debt, I am going to need one more 0% interest credit card, and one more effort to rid myself of this burden once and for all. However, a bit like an addict, I must always be aware of the lure of the credit card and must seek to be free of debt for the future not just for now...
My first step will be to make sure my existing credit card accounts are closed if I am no longer using them - This helps to ensure I have a good credit rating, old unused accounts with high credit limits can count against you. The second step will be to compare 0% balance transfer credit cards that are currently available to find the best offer. The third step will be to exercise the will-power to pay off the balance and start saving money.

Here comes the tax...

It is no surprise that there has to be a reckoning for the vast amount of money spent during the recent financial crisis, and the Government's Pre-Budget Report indicates that this time has just arrived.
VAT is already set to rise again in January, and we are still wondering what effect this was ever supposed to have on the economy... After all, the really essential items such as food and children's clothing are not taxed anyway. The costly step of temporarily lowering VAT appears not only to have been an encouragement to buy luxuries in the depths of a recession, but a slap in the face to those who have struggled to buy essentials for whom the tax drop has had no benefit whatsoever.
National Insurance is also set to rise by 0.5%, and the temporary stamp duty 'holiday' is to cease, and bizarrely, duty on bingo is to be reduced - Great that the government is giving a little tax relief to those who spend their money on frivolous gaming...
This Government is not adverse to making sweeping popularist gestures and maybe they believe there is a bed-rock of labour support in the Castle Bingo houses or the growing online bingo sites such as Wink Bingo? Either that or they think more people should actually be encouraged to play Bingo. Is this a well-considered, well-thought-out policy thrashed out in Whitehall offices or simply a random policy picked out of a tombola - with Camelot looking on just to ensure that the taxes changes are in fact entirely random and not part of any kind of intelligent thought patterns?
Of course, the most popularist tax that this Government are using to effectively cover up the more subtle taxes, is the tax on banking bonuses. The Government propose to tax bank bonuses that exceed £25,000 by 50% - there will be very few people who will be taking issue with this measure, however I can't help but believe that these frankly less-than-straight individuals will find a sleight of hand way around the proposed tax.
There are two measures which indicate the Governments thinking when it comes to paying for it's support of the banking sector during the crisis:

1. The plan to restrict public sector wages and pensions
2. 'Middle-earners' to pay more tax

The combination of these two policies guarantee that the public sector will bear the burden of raising revenue for the Government - they are going to take money from their own employees pockets... The 1% pay cap imposed on the public sector for the next two years is certain to keep wages rises below inflation, therefore effectively lowering income considerably across the board especially when combined with the planned VAT increase.
This sounds like the perfect recipe for a year of industrial action if ever there was one - try explaining to these workers that we are actually emerging from a recession as they count their pennies for the next two years. I happily admit that they are maybe fortunate to have reasonably secure jobs, but when the chips are down and the trade unions start to move, and a general election is looming... I think Gordon may well end up scrambling for that tax tombola again...

RBS makes bad move on bonuses

As if we hadn't had already had a gut-full of what happens when the banking sector is so blinkered to the 'real' world, claims are being talked down that RBS directors are threatening to resign if they cannot pay huge bonuses to their merchant bankers.

Hmmm let's think about that for a while shall we? - these are the people who presided over a catastrophic failure of their own bank, to the extent that 70% of it is now owned by the British taxpayer.... Their failure is largely due to the mis-reading of the markets and actions of those very leaches who demand fat bonuses otherwise they are apparently going to go to other financial houses...
These directors are bawling that if they cannot pay their pariahs, they will have to step down...
OK, still thinking here... trying hard to think of a down-side to allowing the directors AND the merchant bankers to ply their slimy trade elsewhere.... trying hard to work out whether the bank will be better of or worse off without those that took the bank over the brink of collapse.... nope, can't do it - let 'em go!

It may be simplistic to say that we can completely do without an important sector of a major bank, but if they are going to try and blackmail the government and the British public, I think they will have to re-think their strategy. In essence they have to accept that along with the fact that they are still employed, comes a pay-off that means in order to remain employed, they must not be allowed to take the bank to the brink again at least until they have paid every penny back and are willing to stand or fall by their decisions like every other business that they took to the wall with them over the last eighteen months.

The UK public are not impressed by the threat of loss of so called 'talent' through lack of bonuses, not only that, but this is a Government that is willing to be punitive where it believes that public opinion is with them. Don't forget the threat of legislation to prise Sir Fred's sticky hands away from his pension... Seemingly an extremely rash threat, firmly made nonetheless.

Spin is on it's way to try and dampen the storm, it will no doubt be able to show that no such threat was forthcoming from the RBS directors - but just in case they don't get the message... really... don't try it! Do not try the patience of the British taxpayer any more, do not test the resolve of Gordon Brown. He may not be able to solve the crisis but he CAN stop the bonuses and cannot politically afford to back down on this one.