Improving economic news

Last week saw a second monthly fall in unemployment and we had some more good economic news today. Inflation has fallen to three per cent – down by 0.5% and government borrowing fell even more than was thought last year, so that in two years the Coalition has reduced Britain’s deficit by more than a quarter.

Two years ago people were asking whether Britain would join the growing list of countries in crisis. Important institutions questioned whether the UK could deal with the huge debts that were built up in the boom times and then exposed as unsustainable in the bust. We had the worst deficit in the G20 – worse than Greece! That is no longer true. Our record low interest rates are a tangible sign that investors around the world once again believe in Britain. Our deficit is falling, inflation is falling, unemployment is falling and better times lie ahead.

The two most respected international organisations that look at the British economy have made their assessments this week: the International Monetary Fund’s Christine Lagarde, has come to town to deliver the IMF’s annual report card on the British economy; and this morning the Organisation for Economic Cooperation and Development published its Economic Outlook.

The IMF starts by stating that decisive action to tackle the record budget deficit that this Government inherited is “essential” and that “substantial progress” has been made. When asked this morning what might have happened if this Government had not acted to deal decisively with the deficit, Mme Lagarde’s answer was stark: “I shiver.”

Although there are many complaints from interest groups about cutbacks, the thing people have noticed in their daily lives is higher prices. That’s why this morning’s news that inflation has fallen is especially welcome. We are heading in the right direction.

The IMF notes recent falls in unemployment as a positive sign. Indeed, it notes that there have been “fewer employment losses than in the aftermath of previous major UK recessions”.

The current pace of deficit reduction is “appropriate” and the first line of defence against slower economic growth is further action on monetary policy and credit, not yet more government borrowing. The OECD takes a similar view: “the ambitious Government plan to restore fiscal sustainability remains on track and appropriate”.

The UK is putting finances in order and as I said in my last blog, we need the euro-zone to do the same. The IMF says that setbacks in the euro area are the “key risk to economic prospects and financial stability in the UK”.

 

 

 

 

Budget boost for most workers

Amid all the talk of pasties, grannies and cutting rich people’s tax reliefs, the central message of the Budget was a major tax cut for most working people and low income workers particularly. In North East Hertfordshire, people will be up to £220 better off next year thanks to the largest ever increase in the personal allowance announced by George Osborne in the Budget. The income tax personal allowance will be increased from April 2013 by an additional £1,100 to £9,205. This increase will give 35,925 local taxpayers a much needed boost every month. This means nationally that income tax has been cut by up to £546 for basic rate taxpayers since the Government came to power and 2 million of the lowest earners will have been taken out of tax altogether. But it really benefits our area too. 1225 more people in my constituency will be taken out of paying income tax. This means that 2988 will have been lifted out of income tax altogether by this Government.

The Budget was also about boosting growth, with cuts in Corporation Tax and regulations for business and a major increase in training and apprenticeships. The investment tax relief for businesses will also help locally.

Of course, many people love their pasties, but grannies have not lost cash in the Budget, simply their personal allowance differential with lower paid workers and it is right to try to reduce rich people’s tax reliefs, whilst balancing this against the interests of charities. But if all rich people only paid to causes they liked, the medium and lower income taxpayers would be left holding the bill for vital basic services. We should all have to pay our taxes.

Down on the Farm

I went recently to meet local farmers and the NFU to hear about farming concerns and to see what I could do to help with these. We met at the home of Ben and Fiona Cannon at Hyde Hall Farm, Buckland and we were given a tour of the farm outbuildings and office space there. About 12 other local farmers and NFU officials came. The farm is an impressive example of the ways in which farmers can successfully diversify in this age in which the agricultural machine has long superseded manual labour but the need for farmers to generate an income is still as important. It is also a beautiful landscape and recent moves by farmers such as wider field margins are seeing improvements to flora and fauna.
Hyde Hall is the centre of a number of enterprises and we were shown several initiatives which have begun as a result of government business and environmental initiatives. These included a smart cow shed and a converted barn -now office space. The office space was a sympathetic conversion in keeping with the other surrounding barns and it is now home to a small local company. Together with this office space, the farm has other industrial units which are let out and collectively these must be an enormous boost to rural employment. I am very much in favour of such schemes.
When we came to discuss farming concerns, there was significant reference to the EU Common Agricultural Policy in particular and I appreciate that a “one-system –fits-all” approach is not always a viable approach for all farmers within the EU. I am keen we should ensure our farmers are fairly treated and have raised their concerns with Farming Minister Jim Paice MP. We also touched upon the Localism Bill and the way this will deal with new developments. The whole of the group present recognised the need for greater energy efficiencies and this is what the Government’s Green Deal is intended to address. I was very pleased to meet local farmers again and discuss matters they wished to touch upon and I know that they felt it was a productive meeting.