an Economic Problem for Dummies! Todays problem: the future of Britain!

“I hear there’s another recession on the way. Tea anyone?”

Last year Britain’s political programs and opinionated shows all rang out with talks of the Big Society, free schools and health reforms. So… What happened? Well long story short Britain was just barely emerging from a recession so the government essentially scrapped those policies. Now politics, in the UK at least, is all about the economy and good job too as there’re economic storm clouds brewing.

            Well, how bad are things going to get. The short version: bad. The long version: very bad. The OBR’s forecast predicts a narrow escape from a looming recession and that’s assuming that the Euro crisis resolves itself with little to no complications. Which isn’t especially likely. The EU, our main traders, are having their banks struggling to shed assets, there are budget cuts and the threat of credit shortages are incredibly likely. Back home, we have our own problems. Our wage growth is half that of the level of inflation and our power of spending is scarce. Plus, workers in the public-sector are facing lower pays, this may even cause more strikes and, subsequently, more economic problems.

George Osborne's well thought out plans for UK's future may
actually give him something to smile about!

            Is the chancellor improving things though? And what does Britain generally have planned for this oncoming storm. The plans that were, this week, announced suggest that the public-spending cuts will last for another five years and it is hoped that growth can be stimulated by boosting the spending on schools, roads and other common public goods by over £5billion, over the course of the next three years. This seems sensible, although one would think that more capital spending could be made without putting our financial credibility in danger. Plus encouraging investments would provide a more certain boost than a temporary cut. Guaranteeing bank bonds to foster £20billion of small business lending bonds seems sensible too.

            So Britain’s outlook looks pretty dire. But we can take comfort in the fact that the chancellor is doing a good job, maybe not quite perfect but quite possibly. And it seems unlikely that we’ll be able to do much better at circumnavigating this potential double dip recession but at least we know we are ready, even if the recovery will then be another long and painful road.