Austerity Is Over-Cooked

 

Some great job figures recently.

The UK has seen employment grow by 1.6 Million in the last 3 years.

Of course, there are still issues:
• average wages are still falling, taking into account inflation.
• average productivity has gone down by about 10%
• there are still nearly 3 million unemployed in the UK.

I think we have to accept the fall in average wages after inflation. The truth is that we were over-paying ourselves and making the UK a relatively high cost economy. We needed to curb that and we have.

Lower productivity is probably explained by the fact that employers have invested more in staff rather than equipment over the last few years. That will readjust as things improve further and capital investment starts to increase.

As regards unemployment, we cannot afford to be paying benefits to nearly 3 Million people who are not working. We need to see more of them getting back to work, even if that means discouraging enthusiastic foreign visitors from coming to the UK for work.

So good signs, but much still to do.

One thing that is not helping is the continuing austerity programme implemented by the Government.

We need more spending on capital projects to create both jobs and more economic activity. To fail to do so is folly and will certainly delay returning GDP to a growth path.

The IMF, which models itself on Scrooge, has said the UK has pushed austerity too far. It is high time Messrs Cameron and Osborn listened to that message.