The Economy : Ominous Signs

Growth appears to be slowing. Government borrowing is up. There are mixed signals coming from the government about almost everything. There appears to be a softening on Brexit. Meanwhile the EU’s trading position grows stronger with free trade deals with Canada and Japan and soon with Australia and new Zealand. So the market we are trying to cut ourselves adrift from grows ever larger.

There are now trade talks by the UK beginning with the US, but at the moment their scope and objectives have not been made clear. What is clear is a growing realisation among hard Brexiteers in the government that the whole Brexit thing is far more complex than it looked and that even the most ideologically committed will have to face stuff they do not like. The rest of the country is holding tight and hoping for the best.

In a situation of such uncertainty, with new investment drying up, it is kindergarten economics to say that the government now has to step in and give a real boost to the economy. Not just in infrastructure and government projects, but in a re-jigging of the economy towards home manufacture of all the things we use. A consumer driven economy fed by imports has to become one fed by home production, whatever the outcome of the various negotiations, but especially if we get anywhere near WTO tariffs. Such an initiative would include funds for start ups and deals for overseas manufacturers to set up assembly plants in the UK supplied by home produced components. This would transform career opportunities for the  young and provide much better paid jobs than delivering pizzas.

So it is up to this fractious Cabinet to get real and get down to the serious business of economic reform. Without it the future will become increasingly dark as the tax base shrinks and costs go up. So far there is no sign to give hope. But perhaps the summer break and warm prosecco will stimulate a sharper vision.