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.

Steaming ahead ... to a Precipice?

As the UK Government continues blindly along its path (without changing a thing), the 'elephant in the room' is still steaming ahead and taking the UK economy towards the edge of the precipice.  With buoyed up (i.e. inflated) asset prices, colossal debts (Government and personal debts), collapsing tax receipts (income tax and corporation tax) and economic activity 'quietly' but steadily declining (and with massive jobs cuts predicted in the public sector too), it doesn't take long to see the unsustainable nature of the currently 'recovery' (0.1% growth!) and where it's heading.

However, 'talking things up' appears to be back, with news of house prices 'apparently' on the rise once again (i.e. more asset price inflation/speculation - rather than building of new property, which is real wealth creation).  The folly of such concepts is plain for all to see, with just a little digging, as the only people who truly profit in the long run from this are the landowners and the banks (who take away most of our younger generation's salaries). Reports of banks making bumper profits (and paying themselves large bonuses are also back), which is not hard to do in the short term when you can pay out at 0.5%, whilst lending out to businesses/individuals at 5%-30%, and whilst you can also take taxpayers money and re-invest and speculate it in the short term on collapsing assets prices (that are a result of previous actions of the banks themselves) whilst the Government/taxpayer underpins any of their bad debts.

However, inflation is now rising (the Bank of England has had to write to the Chancellor this month), and in normally the best month for tax receipts (January), the Government has had to borrow yet more money rather than being able to pay any debt back - for the first time since records began!! Our economy is in crisis, and founded on outdated/flawed leadership and management practices (i.e. poor moral values, self interest and greed).  The present system is continuing to collapse, but those in power (e.g. Government leaders, banks) are choosing to look after themselves rather than doing anything about it (for the majority of people in this country, and particularly younger generations).  Real economic inactivity and the impact on future generations has been recently highlighted, and there will be more of this to come in the future unless we change things quickly and for the better. The opportunities in the future are vast, but only if we embrace them.

As the risks associated with our economy grow, investment in the UK will drop, our debts will become increasingly expensive to service, and more young people will look elsewhere when considering their future - none of which the UK can afford ...