In focus: What’s the big idea?
Key economic indicators seem to be arriving like London buses at the moment with the inflation figures quickly followed by the unemployment statistics.
John Rider, West Midlands chairman of the Institute of Directors (IoD), had it about right on rising inflation when he said there should be no panic-induced decisions on interest rates as this could threaten the “tentative recovery”.
But he urged the government to act on petrol prices. I’m sure like me you have noticed a sharp increase in what you’ve paid at the pumps this side of Christmas and the impact that must be having on logistics firms and the like is scary.
Rider argues that “a combination of spare capacity, labour market weakness and anaemic money supply growth will begin to weaken inflation in the second half of 2011”. Let’s hope he’s right because rising prices will dampen down any consumer confidence that exists and if that continues the Bank of England will have little choice but to raise interest rates.
Unemployment is up again as well and our patch has some of the worst black spots in the UK. There are a lack of ideas - from all political parties - about how we tackle large scale ‘worklessness’. Above and beyond the vague idea of creating favourable conditions for private sector companies to grow and thus employ more people, there seem to be no new initiatives on the table.
As I’ve said before, I have very real fears about the way our society is discarding large chunks of the population. In some parts of Birmingham, for example, we are now looking at the third generation of unemployment. Postcode snobbery and a lack of real job prospects have created a situation where many of these areas have become abandoned as far as the wider economy is concerned.
And a climate in which the government and (some) irresponsible national newspapers seem to be obsessed with stigmatising large swathes of job-seekers as benefit cheats and dole scroungers isn’t helping the situation one iota.
This government has proved it knows how to cut costs but it hasn’t proved yet that it knows how to grow the economy. It’s not alone in the world in that regard but the very least we should expect is some forward thinking linked to the fundamental issues we’ve mentioned.
Drilling down to the local level, much depends on the ability of the local enterprise partnerships (LEPs) to hit the ground running and to be successful in getting the money they need from national and international pots.
I agree with KPMG regional head Steve Hollis who said this week that the LEP structure is definitely lacking clarity. “We need to be sure what they will do, and where the resources will come from,” he said.
With a lack of clarity locally and a lack of innovative thinking nationally, I fear it’s going to be a tough few months on the economic front.
Comments? Andy Coyne, Insider
