Markets are starting to look at the UK economy and the don't like what they see. This was only a matter of time. The UK has already had a double dip recession and is heading for a third dip. Bootle in his regular Monday DT business column says he expects negative growth for 2012 to be confirmed when the Q4 2012 GDP figures are published soon.
Because of my wife's small French house I keep a close watch on the Sterling Euro rate. Its been falling recently from 1.25 to 1.19 in little more than a month. Conventionally one would say this is good for UK manufacturing industy exports to the Eurozone but given the huge collapse of demand in that area there is little export increase to be had. The main effect of our currency devaluation will be to increase the UK rate of inflation. This will create yet more problems for Dave & George.
What can they do to improve things? They have to bite the bullet and make real significant cuts in public spending . I suggest they abolish the Overseas Development Authority and save £12 bn for starters and then cut benefits for our East European immigrants.
Its time for tough decisions that our politicians boast of taking but seldom do.