|
18 June 2011 |
Justin Urquhart Stewart is one of the most recognisable and trusted market commentators on television, radio, and in the press. Originally trained as a lawyer, he has observed the retail market industry for 20 years whilst at Barclays Stockbrokers and developed a unique understanding of the market's roles and benefits for the private investor.
Justin Urquhart Stewart is one of the most recognisable and trusted market commentators on television, radio, and in the press. Originally trained as a lawyer, he has observed the retail market industry for 20 years whilst at Barclays Stockbrokers and developed a unique understanding of the market's roles and benefits for the private investor. Justin provides financial advice to clients of Kester Cunningham John Financial Planning LLP.
I do understand the term 'rebalancing the economy.' After all, the UK has been increasingly skewed over the previous decade towards consumer expenditure and especially increased levels of consumer debt. However, the word rebalancing implies to me that we just need to nudge it back the other way and we will all be better off. This might prove to be somewhat more difficult than at first considered. Weaning the nation off the addiction of consumerism will provide cold turkey for many as they have to cope with debt reduction and less expenditure and, as we know, this all ripples through to the retailers. Even the likes of Tesco have started to remark on these effects.
This does not mean that retail expenditure stops, but it is probably pulling back to a new level, and one which will mean that the weaker retail propositions will in all likelihood not be able to survive.
The other half of this conversation normally involves the beating of chests by those who bemoan the destruction of the UK manufacturing base. This of course is untrue as we still manufacture quite of lot of 'stuff', but this does not make for good populist headlines of doom and gloom and old television footage of industrial wastelands from the early 1980's. As I have mentioned before, the UK is in fact the world's sixth largest manufacturer - which seems to fly in the face of the doom-mongers.
These depressive characters then change their line of argument by saying how far it has collapsed as a proportion of our overall economy. Certainly this is true as, depending on your measures, back in the 1970's manufacturing made up approximately 22% of the economy and had fallen to around 9%; it now stands at somewhere near 12%. Yes this is a significant fall, but before we sink back into our self induced 'slough of despond' perhaps we should compare this number with some of our neighbours.
In fact France's equivalent percentages reveal a not dissimilar reduction from 17% to 13%, which of course shows that we have lost more, but they have also seen a reduction. However, perhaps we should then take Germany - the internationally lauded centre of European manufacturing. Here the figures reduced from 35% to 21%, which is a greater percentage drop than the UK.
However, care is needed as these figures will mask the fact that it's not just about manufacturing reducing but probably that other areas of their economies are growing - especially around services and the consumer. The UK cannot celebrate in comparison with others but at least it shows that this is not just a UK issue. What I think we should be more encouraged about is that it does now seem to be increasing and that maybe the rebalancing has already begun.
With the latest figures showing new jobs of 450,000 being created in the past year despite some 140,000 public sector jobs being lost, then certainly this seems to be an encouraging sign. However, one set of Summer figures do not make a trend and also we should not forget that the numbers seeking job seeker's allowance actually increased.
***
A couple of US statistics passed me this week and raised an eyebrow. Firstly some 41 million of US citizens are on 'food stamps', and secondly that 50% of all US households are in receipt of some form of either federal or state support cheque. These statistics quite dramatically illustrate the significant level of poverty now affecting the US economy and, with signs of a slowing over the next few months becoming more evident, these numbers may well only get worse. Perhaps the President should remember Clinton's old line of "it's the economy stupid" as he heads into election year. However, his choices and those of the Fed are limited and, with Congress still in a state of spasm over the debt ceiling, we may yet see the US head towards a technical state of default in early August.
***
Just to add to my recent concerns over the complacency around China, perhaps it is time for a timely reminder of that Nation's claims to nearly all of the South China Sea. This has focused on the minute island archipelagos of both the Spratly Islands and the Paracel Islands. The economic 'sabre rattling' around these islands and their territorial areas by the Chinese is causing international angst from neighbouring nations who fear the greater footfall of the 'imperial' dragon. In this list of complainants we can include Vietnam (never one to shy away from a Chinese dispute), the Philippines, Indonesia, Brunei and Malaysia. Well if you are going to upset the neighbours then you might as well upset them all. The question is at what price do they value economic ties and dependency as against the rights of national sovereignty?
***
And finally....many measures have been taken to try and control wayward nations in the past and often with little effect. From trade sanctions to asset seizures, the list is legion. But have the Italians now hit upon what might prove to be the killer blow for the deeply unpleasant North Korean dictatorship?
Reuters reported that Italy has foiled an attempt by North Korea to import tap-dancing shoes in breach of a UN ban on the sale of luxury goods to Pyongyang.
"In December 2010, a shipment of high-quality tap-dancing shoes was blocked at Milan Airport" said the report by the UN Panel of Experts, which monitors compliance with UN sanctions against North Korea.
A UN diplomat told Reuters on Tuesday that the seized shipment involved several dozen pairs of tap-dancing shoes. He said that it was not clear how the tap shoes might fit into North Korean leader Kim Jong-Il's lavish lifestyle, which includes grandiose stage performances by North Korean performers.
Italy has seized other banned luxury items the leaders of impoverished North Korea unsuccessfully attempted to purchase in recent years, including high-quality cognac and whisky worth |
|
