Double dip ... here we come!

Further evidence today that we are heading for a double-dip recession ... 

1. Two of the nine Bank of England Monetary Policy Committee (MPC) members have effectively now admitted it ... with one now saying there is a 50-50 chance the economy will contract in the final three months of the year. They are trying to 'rescue us', or should I say 'cover the recession up', with a further £75bn of quantitative easing (printing money) ... and they hinted a further extension of this is likely in the coming months. The problem with this approach is that the money simply ends up in banks (who caused the problem in the first place) for them to speculate with (rather than lend out to businesses) and it also pushes up prices/inflation (nb the idea that the stock market is 'rallying' is a big con ... it simply follows the effective devaluation of the pound).

2. Sentiment among the British public has dwindled to recession levels as fears mount over the outlook for the economy and household finances. GfK NOP's consumer confidence index fell to -32 in October from -30 in September. It has only breached that level on two occasions since the survey began in 1974 - March 1990, and June 2008. At both points the UK was heading into recession.

But don't worry ... the Chancellor and the Government now have something else to 'pin the blame on' ...  not themselves ... or any of their policies/inaction ... but the crisis in Europe* ... how convenient ... and timely!

* After all the rhetoric from Cameron and the Government about listening to the voice of the people (and giving them a referendum on Europe), it's interesting that they imposed a 'three line whip' to force MP's to vote against a proposal aimed at giving ordinary people an opportunity to have their say over Europe ... whilst they continue to use taxpayers money to prop Europe up! Hypocrisy indeed.

Reality check - public says we're still in recession!

According to the latest Consumer Confidence Survey by the Nielsen Company and the British Retail Consortium (BRC), one in three people do not have any spare money to spend ... and yet the Government's austerity measures have only just begun!

Yet the most startling revelation in this report was not this, but the fact that their study also found that 82pc of consumers still believed Britain was in recession!  

It also revealed that only 14pc of consumers believed the country would be out of recession in 12 months time!

Stephen Robertson, the BRC's director general, said: “The survey shows mounting worries about household costs, an unshakeable belief that we are still in recession and record numbers with no spare cash. A significant and permanent strengthening of consumer confidence is clearly some way off.”

You can say that again ... as this is yet another reality check from the consumer questioning the reality of the supposed 'recovery' ... will this lead to a self-feeding negative downward spiral ? ... no wonder the Government's looking elsewhere for someone to bail this broken economy out (e.g. business investment, exports) ...

And according to the IMF, they should not be pushing the myth of 'trickle-down' economics and proposing tax cuts for the rich! 

NB Watch out because politicians are experts in spin ... and the Government are lining up to tell us that tax cuts for the rich are essential for creating growth and tackling 'the forces of stagnation' ... what rubbish ... as the rich aren't going to spend it and put it back into the economy, they'll just save it so they can become more rich!

Public confidence collapsing ... a self-feeding downward spiral ?

A ComRes poll for ITV News shows that half the country thinks the Government has lost control of the economy and fear a double dip.

The sixth installment of the Cuts Index, conducted by ComRes, shows that almost half the country (48%) believes that the Government has lost control of the economy. This compares to 29% who believe that the Government is in control of the economy.

Polled after last week's drop in GDP, 52% of the public believe that the UK is on course for another wave of recession, up from 38% when asked the same question in October. In contrast, 17% of country doesn't believe there will be a double dip - compared to 24% in October.

Asked whether they think things are generally heading in the right direction, 48% said no, up from 32% when asked in October. This compares to 28% saying they think things are heading in the right direction, down from 41% in October.

Asked about who they trust to see the UK through the current economic situation, 22% of the public say they trust George Osborne, 33% trust David Cameron and 22% trust Nick Clegg (nb the trust in all three men has fallen by 10-12%).

With so little faith in the Coalition, and even less in the Opposition (they polled only 15%!), it doesn't bode well for the future of Britain ... as a mixture of ignorance and apathy will continue to prevail ... 

for a while longer at least. This won't last forever however ... as a self-feeding negative downward spiral has started, with household incomes dropping (except for the very rich) and unemployment rising (nb we have also learnt this week that a staggering 97% of all new jobs have only been for part-time work) ... and hard-pressed people will start to take more notice, and demand very different things ... 

NB Politicians need to take a look at the recent IMF report, and on the risks of civil war (due to imbalances of Power).

Consumer confidence collapsing

The confidence of UK consumers in the economy and their finances has suffered its biggest monthly drop in 16 years.

Rising VAT was a key factor behind the "astonishing" confidence fall, the GfK NOP Social Research report said.  The UK faced a "very painful period", it added.  More government austerity measures and the surprise contraction in the economy meant talk of a double dip recession was "unavoidable", the study said.

According to the GfK NOP Social Research report the eight-point fall in a key measure of consumer confidence between December and January, to minus 29, was the biggest monthly drop since the end of 1994. Meanwhile, the index representing people's expectations of their financial situation over the next year slid to minus 12, down from plus 4 a year ago.

And the score for expectations for the economy over the next year was minus 30, compared with minus two a year ago. Earlier this week official figures showed that UK GDP shrank by 0.5% in the final three months of 2010 - with the Government blaming the poor weather for most of the fall.

And last week, the Office for National Statistics said that the rate of CPI inflation had risen by more than expected to 3.8%. Meanwhile at the beginning of this month - the standard rate of VAT increased from 17.5% to 20%.

"The VAT increase is the first of the government's austerity measures that has had a widespread impact on consumers, and it seems to have hit people's economic confidence hard, especially as the biggest drop was in consumers' appetite for major purchases," said GfK's managing director Nick Moon.

"With inflation on the up and the full force of the cuts yet to hit, these figures could be the beginning of a very painful period."

indeed ... but not for all ... e.g. take a look at my last post.