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politicalbetting.com » Blog Archive » Unemployment just became more important to the rest of us
politicalbetting.com » Blog Archive » Unemployment just became more important to the rest of us
This week the new Governor of the Bank of England shifted interest rate setting policy by indicating rates shouldn’t increase until unemployment falls to 7%. Acknowledging unemployment as a key indicator of economic health makes sense, but when Carney examines the breakdown of unemployment figures in the UK he will see a mixed picture as in the chart.
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Ridiculous comment - Compare and contrast with unemployment levels in the rest of the EU and the mess the Coalition inherited – and while you’re at it, look at the worst effected regions and which party dominates in those areas.
To avoid London overheating, rates may have to be put up, which will hurt some of the regions.
Every country sees this problem; even Germany. However it is much worse when the regions can control their own economies without sufficient control from the center, as happened in Spain, Ireland, and Portugal. But especially Greece.
I cannot see a workable solution that the central government can impose. It even happens at a local level, with many cities having a higher employment rate than the surrounding countryside, and in some case vice versa (*)
(*) ISTR a study about this: can anyone recall it?
'Bribing' Scots is a price worth paying - Blair
http://www.thenorthernecho.co.uk/news/1480905.0/
Hence, many youngsters from the economically-cooler regions go to university, get good degrees, then move to the warmer areas where there is more work. The regions lose their brightest and best - exactly the sorts of people who are needed to set up new companies and industries - to London and the south.
This is not the whole story, which is why the regions are not a barren wasteland. But it is a significant effect.
I would be very wary of a move to the northeast as there are relatively few companies in our line of work; the nearest significant hub is Edinburgh. Experience has shown that telecommuting does not work for many industries.
(Having said that, we had a colleague who lived in mid-France, and commuted to Cambridge once a fortnight, telecommuting the rest of the time. But he was a brilliant experienced engineer who was well worth the extra money he was paid).
"All parts of the country should pull together for shared national prosperity and so on."
Please could you explain exactly what you mean by this, how it would work and the mechanisms required for it to be effected. Or do the words "and so on" mean that you are flying a kite which is not capable of flying.
You have omitted from your scenario: the lack of skill sets in the unemployed, apparent lack of mobility and figures for vacancies and the number of jobs filled by immigrants in the last five years - all by region.
Instead of aspiring to beat London in a competition, the northern cities should be aspiring to use the advantages of being close to London to attract work that cannot efficiently be done in London. It would certainly be a better strategy than endlessly pursuing public sector jobs leavened by the occasional dollop of state-subsidised inward investment.
What the chart also shows is that a significant part of the country which is the most economically active already (on Carney's definition) needs higher interest rates. It has been thus since the war with housing booms in the south east pushing up interest rates before more traditional manufacturing in the north required it. The south east, London and even parts of the south west will be suffering rampant inflation before this target is reached
This policy will end in tears.
As OGH and others keep telling us, Ed is ruthless, so no doubt he will swiftly and decisively move to quell the growing rebellion in the ranks.. Oh...
http://www.independent.co.uk/news/people/profiles/stella-creasy--the-labour-mp-who-has-taken-on-the-internet-trolls-and-payday-lenders-8754945.html
So that's the public-sector nomenklatura, charity execs, politicians and now the BBC top brass all desperately scrabbling for enough money from the public to insulate themselves from the hell-estates they created so it won't be their kids getting robbed or raped at knife-point on the way to and from school.
Reducing those disparities to a minimum requires (among other things) a functioning national retail banking system. We don't have one of those. We have an international investment banking system with a pretendy national retail arm whose sole purpose is to shovel capital to the international investment arm.
Can I afford the same size of house I could up north ?
No - so what ?
Whiny excuses ?
On thread, good to see that we "workshy" Scots have the 4th lowest rate of unemployment in the UK. Guess we can't be that workshy after all!
I'm talking about the likes of Honda, Toyota and Nissan.
I was pi**ed off that the excellent Diamond Light Source was built in Oxfordshire, when it's predecessor the SRS had been in Cheshire.
http://en.wikipedia.org/wiki/Synchrotron_Radiation_Source
Hang on Harriet...your tune's changed.
http://www.thesun.co.uk/sol/homepage/news/politics/5063791/Harriet-Harman-drops-gambling-protest-as-son-joins-bookie.html
English regions dannae make sense to be. Or, at least the northern ones....
Why is Cumbria part of the North-West region (pop. > 8,000,000) and not the North-East (pop ~2.5 million)? Re-brand the North-West as Greater-Lancashire and the North-East as The Borders and we have a more balanced solution.
As for economic activity; Al-Beeb often make the point that the North-East is the only region of the UK to have a positive Balance-of-Trade with therest of the world. Maybe there are lessons there to be learned (or not) for other regions?
The facts are plain to see though: Do not relie on the government to sort out the problems. Last year "The Economist" ran a survey on London which highlighted how post-war governments forced industry out of the capital and into the regions. The incompetant Labour party tried to do likewise [in the 2000s] with the public-sector. Given the failure of manufacturing in the North I have a positive outlook for the future of the public-sector: inevitable decline...!
The DT is having enormous fun
Chris Deerin @chrisdeerin
'I'm only trying to help Mr Miliband,' said Mr Burnham, as he cut the rope and what was left of his leader hit the floor with a squelch.
Chris Deerin @chrisdeerin
'Mr Burnham made clear he wasn't criticising Mr Miliband...' as he tossed the bloodied knife into dense undergrowth
Is this local to you? And is it accurate re the fracking protests?
http://www.spiked-online.com/site/lowgraphicsarticle/13900/
My impression, having spent a lot of time there ,is quite the opposite.
Under its new 29 year old editor Amol Rajan the Independent is rapidly becoming nothing more than a daily depository for a round of 'Nazis!', 'Racism!' 'Muslims in peril', and 'women under threat', student type stories, most of which are poorly researched, inflamatory, and sometimes woefully inaccurate.
The whole Caroline Criado-Perez 'trolling' issue has been exploited to launch a general attack on men, with the paper's writers blatently ignoring the fact that the evidence so far indicates that a handfull of invariably juvenile youth/youngsters have been responsible for generating most if not all of the Perez hate mail. As for men with knives etc, welcome to the Britain we all live in, not just Perez. I'm all for stiffer penalties myself, but find the Independent invariably isn't, unless of course it's a crime involving a "Nazis!", "Racism!" "Islamophobia!" etc etc.
Personally I am liking what Andy Burnham is saying.
I was a regular at the social club for years and still considered an outsider. Very nice place - it used to have the most marvellous railway station, tiny and smothered with flowers/hanging baskets all for free by the gardening loving ticket man. Then some po-faced wotsit said it contravened H&S and they all disappeared.
My mate had two enormous Labs called Monty and Rommel. That gives you an idea of the local viewpoint when it comes to tree-huggers.
First "Jerusalem" next it'll be 'the Red Flag' they're singing. Disgraceful local hippy louts! ;^ )
Independent is possibly the most inaccurate name for it now.
Or for that matter a ‘Leadership challenge’ thread from OGH – It does not compute…!
http://news.sky.com/story/1126887/labour-miliband-told-to-raise-his-game
Alternatively you could put it in some other contexts. Here in the North West we have from Henry's figures 92.2% Employment compared to 93.8% Employment in the South West. Not exactly worlds apart.
Or if you want to stick with just Unemployment figures try contrasting the North West with the Eurozone. We're not doing too badly there either.
There are discrepancies but lets not make mountains out of molehills.
I second this RT @DavidPrescott: Brilliant interview with @andyburnhammp. Voicing the concerns of a lot of activists theguardian.com/politics/2013/…
The BoE is not pursuing a monetary policy with the aim of reaching a 7.0% unemployment rate nor is it using the 7.0% threshold as a target or even as a trigger for rate rises. The Bank's primary mission remains price stability (in monetary policy) and financial stability (in prudential regulation), the latter responsibility being returned following the ending of the FSA's short-lived independence. The only target that the MPC has is the 2% CPI inflation over its medium term forecast period.
Forward guidance has been introduced mainly to deter market speculation on Central Bank policy decisions and to reduce the impact such speculation might have on inflationary expectations. We saw in June how the markets misinterpreted Bernanke's intentions on tapering Fed stimulus in the US and how this drove up market interest rates prematurely. Excessive market speculation risks creating a self-fulfilling inflationary pressure, which in turn can dampen demand and defer investment decisions.
The global economies need demand and investment to keep rising to avoid economies falling back into recession and to ensure sustainable growth paths. The clearer the forward guidance from Central Banks on interest rates and monetary stimulus, the less the threat to recovery. Or so the thinking goes.
So why the announcement of a 7% employment rate as a "threshold indicator"? Apart, of course, from the obvious political and PR appeal of the public misinterpreting it as evidence that the Central Bank is trying to get them a job. The reason for choosing the unemployment as a metric is that it works as a useful and simple proxy for a whole number of other more complex economic indicators.
CPI inflation is clearly not running at 2.0%, the BoE's official target. The bank has argued that, if you strip out inflationary pressures beyond its control (e.e. regulatory and administrative price rises, global commodity prices esp. fuel etc) then the underlying rate is on or about 2.0% and the headline rate will return to target over the medium term. But this is an over-optimistic and underworked argument, especially now that the economy is in the early stages of full recovery.
[to be continued...]
The issue today is whether the stimulus being provided to the economy through low interest rates and asset purchases (QE) will lead to higher than desired future inflation. The BoE is arguing that it will not provided that the stimulus is helping the economy recover productive capacity lost since the financial crisis.
In other words, provided there are still enough unemployed individuals seeking work then re-employing them will not force incomes up. If you run out of available workers then firms start competing for scarce labour by increasing wages. The same principles apply to all other inputs to the supply chain. The supply infrastructure must be able to meet increased demand to avoid inflation. It it doesn't, or can't, then demand will simply push up prices as the amount of goods and services produced will fall below demand.
Another major unknown to the BoE is productivity. Employment is at its highest level ever and yet output per employee has fallen by 8% since the pre-recession peak. There are many theories for the cause of this, but setting those aside, the risk to inflation is that productivity will not recover inline with the rest of the economy. Enterprises will respond to increased demand by reemploying the unemployed but output will remain below pre-recession levels due to low productivity. Again the impact of this outcome would be inflationary.
Going back to the 7% unemployment threshold indicator, the BoE argues that, if reached, there would be a high probability that the post recession economic slack or spare capacity is near to being eliminated. The BoE state 5% unemployment to be the "equilibrium rate" of employment for the UK economy. In other words the rate of unemployment which would apply with the economy running at full capacity.
[to be continued...]
The risk to the Bank is that their assumptions on the amount of slack capacity still existing (long term unemployed tend to become deskilled, factories close and companies go out of business as time passes) may be too high. The other main risk is that productivity gap will not recover with the economy. If either of these two main assumptions fail to the downside then inflationary pressure will rise and the Bank will have to "knockout" its 7% unemployment indicator threshold earlier than planned and may need to start raising interest rates.
Given all the above it is difficult to see how, from an economics point of view, the change in BoE monetary policy does anything other than apply more granular, open and complex criteria to managing monetary policy including interest rates and QE. To regard the change as a drive to conquer regional unemployment or as the foundation for new wealth distribution policies by the government and central bank is wishful thinking.
Still both George Osborne and Mark Carney will not trouble themselves too much in trying to prevent such wishful thinking.
http://www.thesun.co.uk/sol/homepage/news/politics/5063791/Harriet-Harman-drops-gambling-protest-as-son-joins-bookie.html
This set me thinking about what new economic growth (outside of the inherited trends) did Labour policies achieve? I do not look through red tinted eyes so it would help if Mr Manson and the other Labour leaning folk on here could inform us what actions the last Labour government took in their 13 years which "created" economic growth in the regions (excluding industries that had been "nuurtured" in the previous 18 year Conservative govt such as financial services)?
Was the weaker regions "growth" just from public sector jobs? Any anti-Lab folk here should please not use this as an opportunity to slag them off thanks.
It is one of the mysteries of our age that no government., either tory or labour, has managed to revitalise the north.
Ask them why and you will hear some rubbish excuses about thatcher and de-industrialisation.
And with good reason. The last thing labour wants is prosperity in the north. For goodness sake, people there might start voting tory...
Somewhat surprised by the backstabbing of Mascara Man. One wonder where he could've picked up such disloyalty...
In more important news, Journey to Altmortis has gotten a new review which is rather glowing [second review down]:
http://themindpalace.net/the-indie-pub/4576795387
Now I know which is seen as more prosperous and it ain't Ulster...
Malc T @WillieWumpkins
I am led to believe approx 60 at meeting re;Nodashforgas meet in #balcombe last night.About 30 from #balcombe not many with 1750 in Village
Known as ‘balancing’, the arrangement is intended to compensate firms for energy they are unable to sell.
But as the number of wind farms grows, the rates have hit record levels. Firms are often paid more to turn off their giant turbines than for the electricity they produce.
Last weekend alone, householders handed £3.1million to energy firms for doing absolutely nothing as up to 30 wind farms were paid to switch off. The energy that could have been produced between Friday and Sunday would have powered up to 12,000 homes for a year.
At one point, 40 per cent of all the wind energy set to be transmitted to the National Grid was instead discarded, with the loss being blamed on maintenance work and breezy conditions.
More than 95 per cent of payments to energy firms last Saturday were to constrain energy produced by wind farms in Scotland because there is limited network capacity between Scotland and the rest of Britain creating a bottleneck of supply.
The amount of wind energy discarded that day was almost twice as much as any other day on record, and cost families £1.9million.
On June 30, 46 per cent of energy from turbines was constrained.
In total, payments worth almost £15million have been made this year – more than double the amount given in all of 2012. If the trend continues, the bill for the year will be around £30million.
The figures only relate to giant turbines connected to the national distribution network, which make up 70 per cent of wind power.
There are 5,000 giant turbines across the country, with another 1,000 planned. Under EU law, Britain’s energy consumption from renewables needs to reach 15 per cent by 2020.
Payments known as ‘forward trades’ are also made to energy operators by the National Grid. This is where it agrees a payout in advance when the weather is expected to be stormy.
In 2011, £18.6million was paid in forward trades, although the figure is likely to be much lower this year.
Both payments make up about 1 per cent of a typical household’s electricity spend, according to National Grid.
Read more: http://www.dailymail.co.uk/news/article-2388417/
And who has been in charge of Energy for the last 16 years!! Only incompetents could have come up with such a scheme. - Miliband, Huhne, Davey etc
No-one else has? 'Doesn't matter, doesn't matter---it just proves that UKIP can't be taken seriously.'
Nah
Additionally, the growth of the public sector in these regions - although well intended - has meant that the national public sector wages became the price-setter for labour, so potentially making the private sector less attractive.
Finally - possibly - the historical nature of the industry in the area (e.g. coal mining) where the entire community became engaged with the employer perhaps impacted the culture / entreprenurial attitudes over generations?
Renewables do have a role to play but wind is just stupid. I wonder how the artificial lagoon in south Wales will work out (it uses tidal energy, I think [could be hydroelectric]).
Is this a car crash to watch next month?
"Mr Dale described it as a “very, very honest book” that would be devoured by the “political village”."
http://www.independent.co.uk/news/uk/politics/damian-mcbrides-poison-pen-looms-over-ed-miliband-as-memoirs-of-gordon-browns-former-spindoctor-set-to-be-published-8755086.html
And he criticised Labour's opening up of the NHS to private sector firms.
"Once the market takes a hold on the system it will destroy what's precious about it," he said.
Quite a move from the Third way of the last Labour govt, with implications far beyond the NHS, into other areas of outsourcing.
It is a more credible view than Predistribution gonk speak, and one likely to resonate more widely than lefties.
It is really quite a break from the past.
Chris Huhne has landed a high-profile job with an energy company three months after leaving prison.
The former Energy Secretary is expected to earn around £100,000 a year despite working only two days a week for an American company.
A profile on the website of his new employer, Zilkha Biomass Energy, describes Mr Huhne as ‘one of the pioneers in calling for political action to deal with global warming’.
But it makes no mention of his conviction, instead focusing on his political roles and work as an ‘award-winning journalist’.
Mr Huhne has been given the job as the company’s European chairman despite leaving his post as Lib Dem Energy Secretary only last year, and potentially having a detailed knowledge of sensitive Government dealings.
However, the Advisory Committee on Business Appointments, a public body that considers applications for new jobs from former ministers, is believed to have given permission for him to take the role.
Read more: http://www.dailymail.co.uk/news/article-2388524/
Immigration responded to the opportunity. It didn't create the opportunity.
I can't think of anything I'd like less.
antifrank - Nottingham is deliberately pushing rail investment (one reason the planners in the area is so keen on HS2) on the theory that when commuting time to London drops below 90 mins, people and businesses start to move, as the cost differential is so enormous (in my experience, the rent is less than half for comparable places). Conversely, rents and sale prices in London are getting so extraordinarily high that only people who've paid over most of their home costs feel prosperous - the Standard yesterday estimated that for much of London, you need an income approaching £100K to be be able to comfortably afford a 2-bed semi.
What many do not appreciate is the destabilising effects on the rest of the NHS services. If hernia repairs are sold off to the private sector then other surgical services become less viable locally. We also miss the opportunity cost of providing the funds to existing NHS hospitals.
Whatever your views on outsourcing though, it is a clear break from New Labour and a proper policy to be debated. NPXMP has said much the same on this board, so may not be so far from Burnham, and I suspect EdM is not of a very different view either.
June #trade data just out. £5.4bn monthly deficit with #EU - £2.5bn deficit with #Germany. Of course they'd trade with us if we left #EU.
Not a BOOer myself - but this is spot on IMO
http://www.theregister.co.uk/2008/10/29/commons_climate_change_bill/
Interestingly similar to the Presbyterian/Catholic areas of historic times.
http://www.romfordrecorder.co.uk/home/e-edition/sign-up
The previous week had the top 50 most wanted
http://html5.pagesuite-professional.co.uk/default.aspx?pubname=Romford Recorder&pubid=76a56899-ad61-4543-a0a4-bb1b806b5164&edid=4919dab9-d446-4ba7-ad64-8e3b8d6567cf
"Additionally, the growth of the public sector in these regions - although well intended - has meant that the national public sector wages became the price-setter for labour, so potentially making the private sector less attractive."
This is very true of Wales where the private sector can match the salaries but not the benefits (holidays, sick days, pensions, expenses, etc).
The allegations against Peter Davies, chief executive of the Child Exploitation and Online Protection Centre (Ceop), have been the subject of a secretive inquiry by a former chief constable. The investigation was led by Colin Port, former chief of Avon & Somerset, and one of the country’s most experienced detectives.
It is understood that a number of staff at Ceop, which is based in London, were interviewed after beginning formal grievance procedures — including claims of bullying — against Mr Davies. Mr Port is also believed to have spoken to former members of staff who left the organisation after Mr Davies became head of Ceop in 2010..." http://www.thetimes.co.uk/tto/news/uk/crime/article3839224.ece
Colin Port isn't someone I'd want to be on the wrong end of. He's not exactly Mr Cuddly of Dock Green himself.
I wonder if the same principle would apply to outsourcing in other areas of public service.
Outsourcing/PFI is a very tempting source of off balance sheet spending, as Brown and Balls know so well.
But we shall see, personally I quite like Burnham, a far better Minister of Health than his predecessors.
Clever as technical arguments against will be rebutted as the evil Tories looking after their corporate friends...
Lord Ashcroft @LordAshcroft 1m
By the way still no news on the Conservative Party membership numbers. Must assume I suppose it's slipped to under 100000.