The credit crunch deepens

The credit crunch deepens 29.1.2012

The week ended with the announcement that the last quarter performance of the UK was a 0.2% contraction.  This coupled with the fact that

The UK’s debt has been increasing year on year since 2008 and now stands at approximately 492% of GDP, almost five times the value of everything we produce in a year.  The UK ended 2011 with public sector net debt at £1,004 trillion, the debt would have been even worse if the previous Labour government had not continued to spend.   The economic downturn risks pushing the UK even further into recession in 2012

There is currently little room for economic expansion.  The job creation promised within the private sector have not materialised or at a very limited rate such as part time working.  With UK unemployment currently standing at 2.685 million, the highest level since summer 1994 and youth unemployment standing at 1.043 million, the government is spending more on benefits like Job Seekers Allowance.

The governments rise in VAT is hampering economic growth and therefore hamper attempts to improve tax revenues.  However this current government seem hell bent on sticking to their dangerous path, even as the euro zone crisis deepens.  Banks are still not lending to small business.

European leaders at the next summit will also start to talk about growth and job creation.  They are beginning to realise that the austerity programmes will only lead to long term damage in the end, as world markets begin to lose their hope in Europe.

The Tory led government have an opportunity in the nearing budget to change tack.  However it is only Labour’s five point plan for jobs and growth is the only credible way forward to bring the UK back from the brink.  Let’s hope in 2015, the voters give Labour the chance to implement it.