With not a lot happening in my stock market portfolio today, I have some time to comment on wider issues. With the USA Federal Reserve raising interest rates and the Bank of England doing likewise, there is clearly a commitment to tackle inflation aggressively. This will undoubtedly put a damper on the economy in due course and lead to a recession in the UK as has been widely forecast anyway.
Is raising interest rates wise at this time? I think it is because the era of cheap money (i.e. when it was possible to borrow money at less than the rate of inflation) should never have been permitted.
We still have very low unemployment rates from a historic perspective while the Government is still handing out money in the form of energy support cash which it has to borrow to fund. The Government also remains committed to the “triple-lock” on state pensions to protect the elderly such as me which I find simply unjustifiable when the rest of the population have no such protection from a rising cost of living.
The concept of a “balanced budget” where taxation matches Government expenditure has been forgotten and the excuse of keeping the economy afloat in the face of the Covid epidemic has been used to justify excessive spending.
Meanwhile the cost of asylum seekers and illegal immigrants is enormous with as many as 1 million illegal immigrants in the UK. Nearly £1.3 billion per year is now being spent housing asylum seekers, with costs likely increasing as dinghy arrivals rocketed over the summer
The rise in small boat crossings in the English Channel is driving the migration figures with at least 40,000 arriving that way in the current year and claiming asylum. A large proportion are young men from Albania who are economic migrants. See this BBC analysis for the data: https://www.bbc.co.uk/news/explainers-53734793
The Government seems incapable of stopping this “invasion” as the Home Secretary recently called it despite the UK having historically a strong navy. In reality the UK navy has spent billions of pounds on large aircraft carriers (£7.6 billion for two) which are white elephants in modern warfare while it has insufficient border patrol vessels or is unable to use them effectively.
Other parts of the UK economy are in a parlous state with the transport network being horribly congested while as much as £45 billion is being spent on Phase 1 of HS2 alone – another expensive white elephant. At the same time terrorist organisations aiming to achieve their objectives by undemocratic means such as “Just Stop Oil” are allowed to disrupt the transport network and divert police operations at enormous cost.
The NHS is at breaking point with costs rising but simply having enough staff, hospital beds and ambulances seems to be incapable of being provided.
The level of fraud and crime in general is rising and it’s worth reading the recent report of the Parliament Justice Committee on fraud in the UK. Here are some brief extracts:
“Justice response inadequate to meet scale of fraud epidemic. Prioritising traditional forms of crime has left the justice system ill-equipped to deal with continuing rise in fraud, the Justice Committee has found.
The Committee finds that the level of focus from policing is inadequate to deal with the scale, complexity and evolving nature of fraud. Only 2% of police funding is dedicated to combatting fraud despite it accounting for 40% of reported crime. Lines of accountability are confused with responsibility split between local and national forces. Action Fraud has proven itself unfit for purpose and while a replacement reporting system is expected in 2024, victims should not have to wait this long to see improvements in the service they receive.
In addition to a lack of investigation of fraud crimes, there is also a lack of prosecution. The ONS estimates that there are an estimated 4.6 million fraud offences each year, but in the year ending September 2021 just 7,609 defendants were prosecuted for fraud and forgery as the principal offence by the CPS.
Chair of the Justice Committee, Sir Bob Neill MP said:
Fraud currently accounts for 40% of crime and the figure is growing. People are losing their life savings and suffering lasting emotional and psychological harm. But the level of concern from law enforcement falls short of what is required.
We need the criminal justice system to have the resources and focus to be able to adapt to new technologies and emerging trends. The current sense of inertia cannot continue, we need meaningful action now.”
There is currently an epidemic of fraud in England and Wales. The number of cases has grown steadily over the past decade and accelerated rapidly to unprecedented levels during the pandemic. This trend has shown no sign of abating as the country returns to normal life. Around 875,000 cases are reported each year, however the Office for National Statistics has estimated that the real number could be as high as 4.6 million. 40% of recorded crime is now fraud and is calculated to cost society £4.7 billion a year”.
It’s altogether a quite depressing picture of the UK economy, and of our legal and democratic systems that seem unable to respond to these problems in any reasonable timescale. Meanwhile UK politicians seem happy to focus on trivia such as woke issues.
Even the weather has turned bleak and life is thoroughly downbeat.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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