Not Out of the Woods Yet

A quick scan of the adverts placed on British television and it is easy to see the predominance of companies covering gambling, lotteries and expensive pay day loans.

These are all products for desperate people and reflects the continuing weakness of the UK economy. I cannot believe that so many of the UK’s population have suddenly discovered the joys of horse racing or an interest in the number of corners in a particular football match. The fact that many are now turning to the hope of a quick win to boost their finances or hoping against hope that they will scoop the lucky six balls reflects the continuing difficulties many in our society are facing.

UK employment figures are however buoyant despite the latest figures showing that unemployment numbers have stuck at 5.1% for the quarter to December 2015. What is significant is that wage growth is not high. This suggests that a lot of the new employment could be in low paid sectors where zero hours contracts are prevalent or in low pay industries such as care, retail and hospitality. There is also a significant increase in the numbers of those setting up self-employed occupations. Self-employment is often the second choice for those unable to find work. Those who are self-employed will not reap any benefit from the proposed living wage increase and neither will they gain employment rights to unemployment benefit or other social security measures.

It is also sad that today sees the confirmation by Tata Steel UK that the Port Talbot plant will in all likelihood be closed if a buyer cannot be found quickly with the consequent loss of jobs for South Wales. This on top of the job losses announced in other parts of Britain. This is particularly poignant to me as during my school days in South Wales in the 1970’s one of the great sights was driving past the Llanwern Steel Works all lit up and producing steel 24 hours a day. The closure reflects the lack of demand for steel world wide and the fact that other producers can produce steel at a much lower cost, notably China. Oil prices are also very weak further highlighting the lack of demand globally.

The signs are that the global economy is still weak and that the UK has a way to go before it too is out of the woods.