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Excellent study of Britain's declining economy
on 24 July 2012
Larry Elliott, the Guardian's economics editor, and Dan Atkinson, the Mail on Sunday's economics editor, have produced another fine book on Britain's economic ills. Their record is good: their 2007 book Fantasy Island warned that Brown's claim to have ended boom and bust was nonsense.
We have a chronic balance of payments deficit, a looming shortage of energy and food, a shrinking economy. We are a net importer of industrial products, food and energy. In 2010 our trade gap in goods was £98.46 billion. In finished manufactured goods, it was £59.8 billion, with deficits in everything from cars (£2.75 billion) to intermediate goods like components (£11.99 billion) to capital goods (£13.3 billion). In semi-finished goods, the deficit was £8.14 billion, in basic materials, £2.9 billion, in coal, gas and electricity, £5 billion, and in food, drink and tobacco, £17.36 billion.
Services had a £58.77 billion surplus, including financial services at £26.6 billion and insurance at £3.7 billion. The surplus on income earned abroad was £23.04 billion. The deficit in transfers was £20.08 billion, including £9.11 billion paid to the EU.
The authors point out, "The quick fixes with which we have sought to disguise our shrinking economic performance - imperial preference, European Community membership, North Sea oil, financial deregulation, asset stripping, and periodic property and house price bubbles - are all used up." They warn that our economy is in absolute decline.
Between 2009 and 2012 real incomes fell by 7 per cent. 6 million households have only five days' savings. Since 1979 the number of people of working age who are too sick to work has quadrupled to 2.1 million. The `self-employed', that is, those employed, if they are lucky, by a variety of employers, numbered 3.9 million in 2011, up from 2.7 million in 1985.
The workforce, `thanks to large-scale immigration', is too big for the economy's needs. 2.5 million non-UK nationals are now employed here.
Just 20 per cent of workers in Germany are low-skilled, 30 per cent in France and 60 per cent in Britain. In the OECD league table of education, we fell from 8th to 28th in maths, 7th to 25th in literacy and from 4th to 16th in science between 2000 and 2009.
The banks are still not investing, instead they are speculating in interest rates, property and commodities. In 2014 a huge wall of banking and commercial debt is due for refinancing, and the banks will be demanding more of our money to cover their gambling debts.
We need to protect our farmers, develop our energy sources and rebuild industry. To do this, we `need to break the power of the City over the economy, smashing up the big banks'.