Spending cuts to be deepest since 1970s

Following my recent post (Apocalypse-postponed), it is now being made increasingly clear that, whoever wins the election, massive spending cuts are going to have to happen on a scale not seen for generations.  This will once again hit the economy, as well as the well-being of individuals and communities, and move the UK into the next stage of the crisis.

It will hit front-line services (particularly if 21st century management practices are not adopted), reverse the so-called recovery, reduce employment, reverse house prices, and steer the economy into another downward spiral (a double-dip recession). These will all also be exasperated by rising interest rates to pay for spiraling government debt (nb reducing the deficit does not reduce the debt, it just means the debt is increasing at less of a rate!), the risks associated with a flawed/unsustainable economy, and rising price inflation due to foreign exchange rates (and the huge rise in the price of oil).

Greece is starting to feel the pain and frustration/unrest is starting to grow ... and the UK is going to have to act effectively (e.g. introduce 21st century leadership/management and economics) quickly now if it's going to avoid this type of pain/unrest itself in the future.

Employment down - Economically inactive up

Every month the Office for National Statistics publishes the UK's unemployment figures. But the report doesn't just give the big numbers. It includes a fascinating breakdown of the UK at work - and out of it.

Here are few things we learnt this month:

1. There are fewer people employed than at any time in the last 12 years.

The employment rate in the three months to January 2010 is 72.2% - it fell by 54,000 on the quarter to reach 28.86m. 

2. There are over 8m 'economically inactive' people in the UK.

8,157,000 people between 16 and retirement age to be exact - of whom 71% do not want a job. The biggest group are the 2.3m people looking after their families - up by 32,000 on the year. Next come students (2.3m) and the long-term sick (2m). 74,000 are 'discouraged' - up by 21,000 on the year.

3. If you work in the private sector, wages are going down … in the public sector, they're going up.

Average weekly earnings in the private sector are £426 per week - down 0.7% on January 2009. In the public sector, they're higher - £461 per week, up 4.1% on Jan 2009. 

4. Public sector jobs are still going up.

6m people are employed in the public sector - +46,000 on the year. 21.1% of us work in the public sector. The biggest percentage increase has been in the NHS - up by 4% on the year to 1.6m people in January. In contrast, private sector employment is down by 527,000.

5. There are more long-term unemployed

Those unemployed over six months has gone up by 58.7% to 549,000 people.

6. More of us are part-time

Part-time jobs are up - by 1.3% or 87,000 on the year. Meanwhile full-time employment has gone down by 3.4% (-642,000).

7. There are less young people employed

Employment is down for 16-17 year-olds (by 22.2% or 109,000) and 18-24 year-olds (down 6.6% or 237,000).

This is just the tip of the iceberg. Yet the BBC headlines prefer to tell us how unemployment figures are down! I wonder why?

Employment - more 'spin' than 'recovery'

As predicted the 'spin' of 'recovery' is getting louder, and wider ... for instance a BBC headline today referred to the UK jobs market starting to show signs of 'recovery', making reference to monthly research from KPMG and the Recruitment and Employment Confederation which found "marginal increases" in appointments in August.

"It seems that employers are becoming more confident in their hiring decisions," said Kevin Green, chief executive of the Recruitment & Employment Confederation, the survey's other co-sponsor. Again it doesn't take very long to spot the clear 'self-interest' in such statements, given the interest of such groups to talk confidence/recruitment up.

Despite all the current hype about recovery, little has changed and the latest official unemployment figures show that the number of people out of work in the UK is continuing to rise (unemployment increased by 220,000 to 2,435,000 - to 7.8%) and a picture can often says a thousand words ... and the graph below clearly tells a story (even after all the Government's manipulation - e.g. moving unemployed people out of this category and onto incapacity benefit, moving more students into colleges/universities etc) ...

... and the levels of unemployment are set to rise much further in the future too. If that's what we call 'recovery' ... one has to wonder what 'disaster' looks like? ... and given concerns raised about 'double dip recessions', are we about to find out?

... In my humble opinion I think this is highly likely for a number of reasons (e.g. tax increases/public sector job cuts to try to balance the books and pay off the some of massive Government debt) ... and it's unlikely to be very long before it arrives ... and it sounds like Lord Mandelson (the ultimate 'spin doctor') quietly acknowledges/knows this already too ...