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The word ‘credit’ comes from the Latin ‘credere’ which is the active infinitive of the word ‘credo’ which means ‘to believe’.
The problem facing the Chancellor of the Exchequer is that nobody believes him anymore. A report published yesterday by the Chartered Institute of Personnel and Development (“CIPD”) says that unemployment could increase significantly if there is no return to economic growth. As this is the Chancellor’s problem.
In 2009 (when it was all Gordon’s Brown’s fault) the Treasury predicted growth of 3.75% in 2012. The Office for Budget Responsibility forecast 2.8%. So how did the powers that be deal with the bad news?
At 2.55pm on 11 September 2001, after the attack on the World Trade Centre towers in New York, Jo Moore, an advisor to Stephen Byers, Local Government and Regions Secretary, sent an email to the press office of her department saying: ”It’s now a very good day to get out anything we want to bury.”
She eventually resigned on 15 February 2002.
When David Cameron was seeking election as Prime Minister he said We can start the work of rebuilding our economy, our society and cleaning up our political system. Let’s get out there and do it.
Last week, at the height of the gold medal bonanza, the resignation of Louise Mensch, a Cameron A-list ‘chick lit’, and subsequently the Conservative MP for Corby, was ‘announced’ and the Governor of the Bank of England admitted to a zero growth forecast for the economy. There is also a worrying inching upwards of the price of Brent crude which could threaten the desperately needed fall in the rate of inflation.
The CIPD report referred to above suggested that many employers are holding on to staff in anticipation of a recovery. Their spokesperson said there was approaching a ‘make or break’ moment; there will be redundancies if there is no bounce from the bottom.
The conundrum which is occupying an increasing volume of financial editorial output is ‘where is the credit?’ It’s easy to accept that the period of excess (2001 – 2008) involved too much credit and thus the phase of austerity (2009 – present) has involved savage spending cutbacks and a disappearance of credit. There is cash. One report has suggested that the FTSE 100 companies have around £130 billion in liquid reserves. The private client stock brokers will tell you that their clients are hoarding vast reserves of cash.
But credit is not available where credit is needed. The Department of Business, Innovation and Skills has failed miserably to ignite the business community: Project Merlin is dead, New Buy and other mortgage incentives have withered. It is thought that Quantitative Easing (”QE”) which is printing money, in its first phases succeeded in generating credit of £30 billion from £125 billion of notes. Now all hopes are pinned on the Funding for Lending innitiative: don’t hold your breath.
The word ‘credit’ means ‘to believe’.
In 1964 the Irish Group, The Bachelors, sang
I believe for every drop of rain that falls,
A flower grows.
I believe that somewhere in the darkest night,
A candle glows.
I believe for everyone who goes astray…
Someone will come, to show the way…
I believe, I believe.
The problem for Messrs Cameron and Osborne is that the economy has gone badly astray, and it may be the electorate who show them the way – whenever the bad news is announced.
Tony Drury tweets @tonydrury39
- Freedom in the City on 22nd May with JP Floru on May 22, 2013 12:30 pm
- The Freedom Association’s Magna Carta Pimms and Politics Cruise on June 15, 2013 12:30 pm
- Conservative Renewal Conference on September 14, 2013
- The Freedom Zone on September 30, 2013
- The Freedom Zone on October 1, 2013
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