Had an interesting discussion, wanted to share it with you.
Christine has breezed into town and given the thumbs up, except for growth.
So what is it all about.
Austerity is a brilliant medicine, except that it has side effects i.e. lack of growth and recession. And, side effects have been known to kill the patient. Greece?
So what is necessary?
Creating demand without printing money (QE) or reducing interest rates which are at a record low of 0.5% (not much of a leeway there).
You have to be kidding!
No there is something that can be done. Well look at the Lorenz curve, how it is bowing out more and more. Another way of looking at it is the figures from The Which in to-days Citywire Wonga article. 57% of households on income below £30,000, next 27% on £30,000 to £50,000, next 10% on £50,000 to £75,000, next 6%above £75,000. Hardly a normal curve, definitely skewed towards the richer end.
There is a need for some redistribution towards the lower end to boost demand and help the flagging High street.
Easier said than done.
No, there is a way. It is the FTT (Financial Transaction Tax), which could be used to withhold some of the benefit cuts. This in effect would give a redistribution of income from what is planned.
Nick Clegg keeps harping about social mobility and equal opportunity. I am surprised he has not cottoned on on the above. Especially as the argument can be couched in equality of the North/South divide. London and SE growing on the backs of The Queen's Jubilee and the Games, whilst most of the rest of the country is in recession, especially the North West, whilst having to accommodate London's reject poorest. They then have the audacity to shout about what a wonderful contribution they make to the regions.
The other aspect is investment, tax incentives for manufacturing investment would help us become more competitive, help bring about the shift from financial services to manufacturing,and lift us in manufacturing competitiveness, in which we are way behind our German competitors. After all labour competitiveness is just one aspect of the equation.
What do you think-Agree or disagree?