It’s The Economy, Stupid!

Who Would Have thought that the Economy could be the Tories’ Achilles Heel?

It is official, the UK economy grew slower than thought previously. It grew by 2.6% in the 3rd quarter of 2014 rather than the 3.0 % that was estimated. But, hey ho, that is still growth so where’s the problem?

 
As David Kern, chief economist at the British Chambers of Commerce, said: “The stark revision in annual growth confirms that the pace of recovery is slowing. The most concerning aspect of these figures is that the current deficit has risen to an un-sustainably high level.”

 
The deficit? I thought that was going to be destroyed by all the cuts? No. (The problem with politicians, one of the problems, is that they use “deficit” and “debt” as if they are interchangeable, which they aren’t. This is true of both main parties, and the Liberals). The Tories were referring to the debt, the structural debt, probably.

 
Also, revised down was the gross domestic product (GDP) which is one the primary indicators used to gauge the health of a country’s economy. It represents the total value of all goods and services. Think of it as the size of the economy. The current deficit now stands at 6% of GDP. Which is a record, but not one that Gideon, sorry George, is going to boast about. In fact, the current account deficit has been above 5% of the GDP for the last 15 months which is the worst record since the early 1950s.

 
Who cares? We all should. If you add up all the debt in the country, the government’s, businesses’, personal etc. the total debt is about 500% of GDP. Put like that we should all be scared. It will be almost impossible to get the debt burden down with the size of the current account deficit.

 
The economy has always been by saved by the positive balance that we enjoyed between the return on our investments abroad and the payments we make to foreign investors. Trouble is, even that has been in deficit since halfway through 2012.

 
So, we really in the deep do-do. Or are we? One way out could be to keep selling our best, blue chip companies, and any other assets we have to foreigners. But, how long can that go on? Right up to the point where the foreign investors think that we can not repay or service our huge debts and with the scale of our growing debt……………

 
It’s the economy, Stupid, and it is not good,