The economy contracted by 0.3% during April, according to data published this morning, following a 0.1% decline in March. Simple question: what should the Government and/or Bank of England do to stop the rot?
10 responses from the Newspage community
Simply, we should rejoin the single market. We have more vacancies than the number of workers available to fill those roles, along with raging inflation and a clear and present risk of stagflation. We need more workers in those jobs paying taxes and growing our economy which can support improvements through investment in public services. This dogs Brexit has failed, and we need to mitigate the problems where we can. The quickest fix is to rejoin the single market or jump into EFTA. Hardworking people shouldn’t have to suffer for one man’s failed vanity project.
The economic situation is dire. We need further emergency measures to prevent a prolonged and deep recession. If I was in Rishi Sunak's shoes, I'd reinstate the £20 increase in Universal Benefit, remove the 5% VAT on gas, and slash VAT on everything else to 10% until we're out the woods. That would help consumer confidence and bring forward spending on high ticket items, giving a major boost to economic growth.
They need to double down on the support into business, especially into SMEs. If we they can keep businesses confident in investing in growth, and working hard to ensure they have a strong foundations this will support sustainable job creation, good wages and support people as they personally weather a cost of living increase. Our economy is crashing, so we need to put the oxygen mask on the parent before the child. I believe SMEs will play a huge role in our economy bouncing bank, so ensuring they are able to do that is key.
The Government needs to open the filing cabinet, dust off the folder labelled "Build Back Better" and begin to implement it. Where is the support for entrepreneurs and small businesses? The underinvestment in infrastructure redress? All we get is hot air and waffle! It is imperative that the Government reduce taxes, stimulate growth and invest in infrastructure, innovation and apprenticeships for young people.
Sadly, there is not much that can be done about the current economic situation we're in. Central banks globally have failed in their inflation management, money printing and interest rate policies. They are now caught between two policy errors which are not putting rates up enough to curb inflation and putting up rates too much to push us into recession.
If the government want to stop a recession, then we need action quick. SME's are the backbone of the UK economy and they need help, especially with fuel/energy bills. With inflation still a concern, the government need to drastically cut spending to free up fiscal space to cut tax and VAT for our small businesses. Its a difficult tight rope to walk but we need decisive action very quickly.
We are on the brink of a recession, and the government needs to step in to stop this. It is telling that the current contraction is due to a drop in the health sector for COVID-19 related spending. If ever this was a clear signal that the country is buying only what’s absolutely necessary and that the general public has no extra spending power left to bring back the economy, I don’t know what is. Rishi Sunak has it entirely within his powers to extend the limited cost of living support package rolled out in his spring statement, by announcing in a summer statement rather than waiting until autumn as he appears to prefer. The general public is hurting, so he needs to act now.
These numbers still don’t fully include the cost of living crisis and its effect on consumer spending, which means a sharper contraction - and potentially recession - is to come in the months ahead. Any additional rate rises should now be put on hold and there is an argument, too, for easing tax rises. Also, this is no time to start a trade war with Europe over the Northern Ireland Protocol.
Further encouraging employee ownership (EO) would be a great move for the UK. The UK's productivity has been poor even before the recent negative impacts of Brexit, Covid, and the Ukraine war. Studies have shown businesses typically see a 7-8% productivity boost following transition to EO. Staff feel more of a sense of belonging, and directly benefit financially from their hard work. There are already generous tax breaks available to companies making the switch. However, awareness of EO is still low. More public announcements by the Government would raise awareness, encouraging more firms to make the jump, gradually reducing the wealth divide and boosting the economy accordingly.
So what if the economy contracted by 0.3% last month? It's time we stopped obsessing over temporary movements in the UK economy and instead, focussed on the wellbeing of the people who live here. Sure, steady, long term economic growth helps build optimism for the future, but temporary setbacks are part of life. Rather than arguing about how to make the numbers look better, our leaders should be focussing on the daily living experience of us all. There are wider policy issues to tackle and obsessing about short term growth detracts from the real challenges. Fix the cronic shortage of labour and encourage entrepreneurship, rather than pandering to big businesses. Get the basics right and the economy will look after itself.