Economic Realities – Should Politicians tell the truth?
Should politicians simply talk up the economy, when the truth is that it is still suffering and has a long way to go, before we can truthfully say it is growing? A General Election is looming large on the horizon, and the points scoring process as started. Labour, via Lord Peter Mandelson, are accusing David Cameron, and the tories of putting down the British economy, when they should be talking it up. In the past this has happened, 1979, for example. A beleagured Prime Minister , James Callagahn claimed inflation was only at 8%, as Labour grappled with the winter of discontent, like a paratrooper trying to take the air out of his parachute on landing and put it back in its pack, or like King Canute trying to order the sea to obey him. However hard he tried the reality showed up. Britain was not prepared for how bad things REALLY were ,as interest rates soared after the election to tackle the parlous state of the economy.
We all know there are very difficult days’ ahead, more difficult than any of us can remember, so I say to all politicians ADMIT the truth, don’t pussy foot about dismissing opposition comments that are the stark ECONOMIC TRUTH. Britain is in a mess, Britain, as it has been proved , was “not best placed to come out of recession quickly”. Gordon Brown is having to eat his words more and more, he is just not to be believed on anything, as he struggles to save HIS job, and not the country.
Exchange Rates not much better
The exchange rate between UK Sterling and the Euro continue to hover around 1.10, which means that the agony is prolonged for those on pensions, in Spain, who were used to getting 1.40 . This factor, in addition to the credit crisis, is having a knock on effect to the Spanish economy, particularly in the Costa Blanca area. If people on pensions are unable to have as many “menu del dia” as they did before, restaurants will suffer, as will the entertainment industry per se.
Supermarkets carry on , as people always need to eat and clean their houses etc, but there are so many in such a small area around Torrevieja, that you wonder how they survive. A year ago Iceland were recruiting on a large scale, but I have heard that staffing levels were reduced due to drop off in business. This may have been because they opened San Javier and La Marina stores, which generated more overheads, whilst dispersing customers away from Torrevieja store, to go locally.
There seem to be many supermarkets, with many branches, such as Lidl, Consum, Carrefour, Mercadona. How do they make money? There are more supermarkets in that particular area per square kilometre than in the whole of the Scarborough and district area in the UK.
For people on pensions affected by the recession, then you should consider ways to raise more funds, by way of such vehicles as lifetime loans.
USA out of Recession
The US reported growth of 0.90% in the last quarter, against the fall in the UK of 0.40%. The American news is good for the UK, because it should see the UK come out of recession by the end of this quarter. Things are still not as stable as we would like, but the patient is getting better.
FTSE over 5,200 Dow Jones over 10,000
As predicted the stockmarkets are recovering quite nicely. However there has to be concern over the exhange rates. Low UK inflation is having a negative effect on the situation, thus prolonging the difficulties for ex-pats living in Spain. With interest rates set to stay low, one cannot see the position improving in the short term.
I suspect that this will change when the official announcement that the UK is not in recession comes at the end of the month.
Gloomy Forecast for Spain
Despite Senor Zapatero stating Spain would be out of recession by the end of the year, reports in the British press yesterday , quoted the EU as saying that Spain was likely to slip further into recession and that unemployment will reach 25%. Now this figure is only based on people who are entitled to claim, and does not exclude “autonomo” workers, who may well have deregistered from the system.
Demand for property is only 250,000 a year, yet there are well over .16 million empty or part completed properties, which suggests that it will be at least 6 years until that slack is taken up.
Add to this that exports from Spain are costing more to non EUROZONE currency countries, life is likely to be very difficult, unless domestic demand can be stimulated further.
The Spanish government are talking about raising taxes to cover the situation, but this will only add pain to the economy.
