A layman’s thoughts on the current UK economy

I’m going to do something that I don’t normally do, and write a quasi-serious opinion based piece. Do bear with me dear reader, it’s been a while!

This morning, I saw a news story reporting that East London Buses staff have gone on strike because they’ve been given a pay freeze. Erm, hello, RECESSION?! (and reportedly we’ve just hit the longest, most entrenched, period of it in modern history).

At a time when the transport industry are laying off thousands of people and scaling back improvement projects etc, do a group of bus drivers really think that them getting even more money on top of an already generous salary is a priority? Does it click with them that if they want an increase, we as travellers will have to foot the bill for that? It’s just selfish in my opinion.

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I work in accounting for a worldwide brand name, and despite having our best ever year last year, we too were forced to plump for pay freezes. I say ‘forced’, I mean we all willingly took a pay freeze to avoid redundancies (which, ultimately, we still had to make).

In terms of the recession itself, I don’t think that we’ll exit until Q1 2010. I’m by no means an expert; I don’t even look at the money markets, but I would like to think I have a good business head at times, and can cobble together a halfway-reasoned opinion.

I don’t think that we’ll exit in Q4 – yes it’s Christmas, but there was too much disappointment at the Q3 results to get the market moving quickly enough. I have already done most of my Christmas shopping, and I have definitely scaled back this year. Add to this the fact that the UK is a service industry lead economy, so we’re not exporting goods for Christmas, and I think it’s unlikely we’ll see improvement. That said, increased borrowing may mean that we hit stagnation, which is a bit of a duff way to say we’re looking better in my opinion (and ‘wrong’), but still by definition an ‘exit’.

I prefer Q1 as I think the post-holiday mood will be more optimistic, and also because most people get their salary reviews around this time. I believe that employers need to give modest salary increases to help people ‘feel’ richer. People may realistically be no more so, but the feeling of wealth that they get is what the country needs to get it spending and producing again.

I do think that the key to making enough of an increase is with the high street. If we can get the ball rolling with the consumer, we should easily be able to increase business confidence and get output raised, both to domestic and foreign markets.

Speaking of foreign markets – stop talking our currency down people! Yes, a weak fx rate as we have at the moment is bad for those of us buying abroad, however it is marvellous for attracting foreign investment and attracting people from overseas into buying our goods! They realise that when the UK market expands again, there is serious money to be made from their initial investment into our economy when things were low. In the grand scale of things, what’s more important? Us sorting out someone elses economy, or getting them to help us sort out our own!

I don’t think the VAT increase will have significant effect – we say the reduction had no effect, so really the increase shouldn’t either. The question is whether the public will be sensible with this or blow it out of context.

I could be completely flawed in my thoughts, as I say, I am just a layman, any oversights are my own.

And drivers of East London Buses… if you don’t wish to work for your current salary, I know plenty of former service industry professionals who will happily do it, and for less…

About Gari

Thirty-Two year old northern lad; living out in the Peak District and rediscovering life after having had a brain tumour.

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