The best news in the last week for the political parties in the run up to the UK election has been the Icelandic ash cloud that has engulfed most of Northern Europe over the last few days. Apart from causing travel chaos to thousands of people and costing the travel and ancillary industries millions in lost revenues, there have been enormous “green savings” due to reduced carbon emissions.
The Liberal Democrats have benefited the most as the opinion polls seem to show they possibly have potentially a bigger influence in the next Government than expected by the Conservatives or Labour, following the first live UK election television debate. However, the big issues still remain and also the uncertainty of how anyone in power will tackle them, especially as many of these will not be resolved during the next five years.
Whatever the outcome of the election, hung parliament or a majority winner, addressing UK debt, public sector spending cuts, tax increases, health, education, decline of sterling, interest rates and inflation indicates a slow recovery plan over a number of years to bring prosperity back to businesses and consumers.
At last the 6th May 2010, a date for the nation to decide on the next few years of Government. Which party, if any, will have the majority of the country’s vote and more importantly what will be the turnout level. The media have already done enough in the first few days since the announcement to put off would be voters by smothering us with their coverage and opinions on the state of each major party and the main issues as they see them.
Forget the nuances of tax and pensions for the top earners, it is the average and lower paid, unemployed, pensioners and businesses that need convincing on how politicians will deal with long term UK national debt, employment, interest rates, sterling, healthcare etc. Local authorities not delivering and high council tax levels are where the majority of the public see Government in action, (or not). Hospitals, education, re-cycling, road maintenance, (potholes and line painting), emergency services are a few of the issues to be addressed.
This is probably the most important election in decades and the media and politicians have the opportunity to engage with the nation and get everyone interested in the recovery of UK plc, but delivering change will involve some pain for all.
The Bank of England kept interest rates at a record low of 0.5% for the 12th consecutive month on Thursday, a decision widely expected as any rise in the cost of borrowing could damage the UK’s fragile economic recovery. The bank has not pumped any more money into the economy under its quantitative easing (QE) but may have to restart its asset-buying programme, (QE), if the economic outlook deteriorates, but many analysts are predicting monetary tightening later this year. It appears that the “tensions that underlay the build-up of large world imbalances have not been resolved” and the UK’s largest export market, the euro zone economy, has stalled.
Despite the upward revision to GDP in the fourth quarter of last year, to 0.3% from an estimate of 0.1%, the economy remains weak. Businesses are still under serious pressure and the threat of a double-dip recession is more serious in the near future than risks of higher inflation.
The pound took a pounding last week and suffered its biggest one-day fall for more than a year amid the prospect of a hung Parliament, after the election mooted to be in early May this year. There are fears that this will prevent swift and decisive action being taken over Britain’s public finances. Sterling fell to under $1.50 for the first time in ten months and today closed at $1.51. Against the Euro it is only €1.11 and has remained at this level for some time, despite debt issues in Greece and Portugal putting pressure on the Euro.