On the face of it, the Bank of England presented a pretty positive growth outlook albeit inflation remaining above target for the next year. And I believe Mervyn King was right to talk about the fragility of the economy and how the world economy faces ‘difficult and dangerous’ times particularly if the G20 continue to focus on protectionist issues rather than Global concerns.
So far so in agreement.
Where I have major concerns is around Mr King’s comments on employment and how this will pan out in the near future. He states that he believes the private sector could provide enough extra jobs to offer to those made redundant. He says: ‘It is clearly feasible and not at all unreasonable to see a shift in employment between the public and private sector’.
Well I just can’t see this happening. Looking at the facts, we already have a record number of people forced into part time jobs (1.13m according to the latest figures from the ONS). Added to this statistic is the rise in the long term unemployed to its highest level for 13 years. If this is what the situation is like now, you have to ask yourself how things are going to be when the austerity measures kick in and the real hurt begins. Research by PWC suggests that spending cuts will trigger a wave of redundancies in public sector organisations and the private sector businesses that relied on contracts in the state sector. The report suggests that nearly 1m extra face unemployment due to public service cuts. To think that the private sector can pick up the slack just doesn’t seem to be feasible in the short to medium term.
Of course I wouldn’t mind being proved wrong…
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