Coffee House

What use is a GDP recovery if living standards are stagnant?

4 September 2013

3:14 PM

4 September 2013

3:14 PM

Labour had better get used to headlines of economic upgrades. There’s about two dozen major forecasters out there, and each will take a turn to say that Britain’s doing better than they’d thought. To have such good news repeated will be a headache for Labour, as Iain Martin blogs today. But Labour are right to latch on to the caveat: the GDP number are not much use to someone facing a decade of wage stagnation. Words can be deceptive in economics: if you read ten news stories from ten forecasters talking about upgrades, it doesn’t necessarily mean things are getting better. The Treasury recently released five-year forecasts from the people it follows (pdf, here) and it’s not much better than the fairly glum forecasts from the Office for Budget Responsibility.

Anyway, is Britain growing faster than America – as The Times declared in its headline today? In this three-month period, yes. But the overall picture isn’t as encouraging:-Screen Shot 2013-09-04 at 14.17.05

 

 

[Alt-Text]


Crucially, immigration is a factor in Britain. It wasn’t so long ago that Osborne’s Treasury was saying that GDP per capita, rather than the headline GDP figures given by the OECD et al, was the more important metric. But this basis, the recovery simply does not exist.

GDP Per Capita

Labour will be trying to focus on wages. And much as though I hate to admit it, they have a point. As Ed West and I argued in a cover piece recently, Osborne’s recovery plan (based on monetary activism but fiscal conservatism) really is a plan for trickle-down economics. The official policy of QE involves reviving the economy by inflating assets. Unsurprisingly, the richest own most of the assets. Those who have investments find the value of these rising. But for those who only have cash in the bank – or no savings at all –  there is not much to be optimistic about.

If Labour can get its head around the effects of QE, and work out the the distributional impact of monetary policy is way more scandalous than any tax policy, it may have a critique. Those who have the most assets have done the best, while the poorest face inflation that outstrips earnings. It’s sometimes said that inflation of below 5pc is nothing: remember the 1970s? But what matters the gap between inflation and salary growth. Put the two together, and you get the kind of misery depicted below:-

Screen Shot 2013-09-04 at 14.01.25

 


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Show comments
  • Dougie

    If GDP goes down, wages will (at some point) go down. If GDP goes up it allows the possibility that wages will, at some point, go up. So GDP going up is definitely better than GDP going down. But the only hope for a sustained recovery is a long, grinding climb out of our current indebtedness. Only an idiot or a Labour spin doctor could believe this recovery could ever be quick and/or easy.

    • Daniel Maris

      Unless a bunch of super-rich co-conspirators are rewarding themselves obscenely large income increases, while companies squirrel their earnings into tax havens.

      Then people of low and middling incomes won’t benefit from the GDP increase.

      Similarly if the GDP increase is due to oligarchs from all across the world buying UK property, that won’t benefit ordinary people – it will just drive up house prices.

    • http://www.DNotice.org/ Dean Jackson

      “But the only hope for a sustained recovery is a long, grinding climb out of our current indebtedness.”

      The economy can’t climb out of indebtedness when the Bank of England sabotages any possibility of [capital] net investment, by maintaining low interest rates. There’s no productive economic growth going on.

      “If GDP goes up it allows the possibility that wages will, at some point, go up.”

      Not with the net investment-busting low interest rate policy followed by the Bank of England!

      See my comment below for more on this neglected story on interest rates, etc…

  • Wina Beel

    The rise in figures of GDP does not always equate a good standard of living.
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  • Terry Field

    It is not just desirable that living standards do not rise, it is a requirement for a 50 year plus ‘recovery’.

  • http://www.DNotice.org/ Dean Jackson

    The article reads, “The official policy of QE involves reviving the economy by inflating assets. Unsurprisingly, the richest own most of the assets. Those who have investments find the value of these rising. But for those who only have cash in the bank – or no savings at all – there is not much to be optimistic about.”

    And what assets would those be? Stocks? Housing? Hmm, every thing but net investments in capital production, miming the United States, the Euro Zone and Japan. Interesting coincidence? Not hardly. It’s called economic sabotage.

    As all economist know, investment isn’t based on the cost of borrowing, it’s based on the expected return on the investment, likewise with net investments, but such net investments are institutionally prevented from taking place due to the low interest rate policy the Bank of England, Federal Reserve, European Central Bank and the Bank of Japan are following, effectively preventing such net investments.

    Central Banks in the West and Japan use credit expansion (now called Quantitative Easing, because the old term, “credit expansion”, had a soft counterfeit tone to it!) to manipulate interest rates downwards, preventing net investments, since the return on such net investments (which is interest) is so low.

    So, why are central banks sabotaging their respective economies by maintaining low interest rates (in previous recessions Western central banks knew how to recover from a central bank-induced recession–increase interest rates)? The inexplicable phenomena of the above mentioned central banks all following the same counter-indicated policy is quite simple. The policy is tasked by Moscow & allies, the purpose of which is to create a level technological playing field wit the West.

    For those unfamiliar with this subject, the “collapse” of the USSR in 1991 was a strategic ruse under the “Long-Range Policy” (LRP). What is the LRP, you ask? The LRP is the “new” strategy all Communist nations signed onto in 1960 to defeat the West with. The last major disinformation operation under the LRP was the “collapse” of the USSR in 1991. The next major disinformation operation under the LRP will be the fraudulent collapse of the Chinese Communist government. When that occurs, Taiwan will be stymied from not joining the mainland.

  • CortUK

    What was it Bobby Kennedy said about GDP? It measures everything except that which is important to individuals: happiness, security, health, family. All modern governments care about is asking people to subjugate their personal situations to the greater national good. Like Marx, Lenin and his gang of fools.

  • Terry Field

    The debt profile in Britain will preclude an increase in personal free wealth for half a century. And where is the ‘rebalancing’ – we have an old fashioned property pump-up no cut in the social welfare budget to speak of – and nothing like that required.The relative decline will accelerate over the next half century, and Britain will be absorbed into Neue grosere Deutschland in Europa.
    France and Britain will become less and less listened to, and the only place for the world to visit in Europe will be Berlin.
    It could have been different, but the British destroyed their own post-war potential, and there is now no prospect of recovery.
    And none of the pigmy parties in Britian should expect recovery with an increase in living standards. That is yesterday’s world.

    • rubyduck

      Don’t give up, mate. We were pretty well written off in the 70s and then came Thatcher.

      • Terry Field

        I’m afraid its too late for me – I did ‘give up’ and emigrated – best decision of my life.
        Every time the buy-a-vote left get in they screw the country and every no good slob has a field day.
        But this time it has just gone too far. the place is a hollowed out shell; to think of the country it was from the 18th C right through to 1945 – the greatest civilisation and the most achieving culture on the face of the planet.
        Now the bright sun is a red dwarf. With the accent on red.
        Thatcher was very great indeed, the more so since she dragged the country despite the degenerate wails of the money-for-nothing left, whose numbers now are so great in Britain that they blot out the sun.
        As for the future, Clegg?

  • Daniel Maris

    At last, the Spectator starts to get it…that GDP per head is more important than GDP and that mass immigration is retarding our economy, not vitalising it.

    Next they might realise that it’s disposable income that really matters to households and again simple averages on income mean nothing when the richest tenth are awarding themselves huge year on year increases.

    Then they might realise that, one way or another, if you allow 500,000 new people into your country every year, the disposable income of the mass of working people will inevitably get squeezed as you have to pay for all that capital expenditure on new schools, new maternity wards, specialist FGM clinics and all that revenue expenditure to pay for housing, maternity and child benefits.

    • Terry Field

      The trade deficit and the cumulative debt makes a nonsense of your arguments – for a whole lifetime Britain will need to suppress consumption and direct activity via taxation and other means towards export earnings.
      ‘Benefits’ will happen only from taxation and redistribution – that is pretty extreme already – and via a -( think about this!) – BALANCED BUDGET!!
      Grow up.

      • Daniel Maris

        It’s nothing to do with you. You left the country.

        But actually the budget can easily be balanced if we tackle welfare dependency and increase taxation.

        • Terry Field

          A silly ‘Little Eglander’ comment about my residence.
          As for the debt, you are dreaming – the composite is the greatest in the world by a margin, except for Japan where he state debt issuance is owned locally. “Your’ fellow residents’ express the same post-imperial arrogance in saying ‘it is easily balanced’ – the total debt then has to be repaid – and if there is a rise in global rates which the UK cannot manage, debt interest will sink ‘you’ and your fellow ‘residents’.
          You have damn all industry, few net assets after the bank hollow-out, and a pretty awful skills profile.
          Never mind, there is always PPE from Oxford and a silly house-price-boom
          Almost hopeless.

          • Daniel Maris

            Well it doesn’t seem you wish to do anything constructive to help, so why not avert your eyes and walk away.

            BTW what paradise are you living in?

  • sarahsmith232

    the apocalypse didn’t happen. this has still yet to occur to anyone at the Guardian though. Labour has no answers, just it’s constant harping from the side-lines about unfairness. it’s still yet to come out with a one single policy that can connect with anyone.
    but then it doesn’t need to ’cause we’re no longer living in a democracy and apparently nobody seems to be bothered. they and the Lib Dem’s have stitched up the constituency boundaries so that Labour can get back in with an ‘Operation Black Vote’ and their welfare dependent client state combo vote crawling them over the 35% line. the Tories need 40%. I like every other sane minded white person want to leave the country.

  • Smithersjones2013

    What use is a GDP recovery if living standards are stagnant?

    Yep thats the real biggie that Osborne and Cameron seem to have no answer to. It begs the question whether GDP is just another of those meaningless statistics that are basically worthless. Politically speaking, if economic activity does not translate into prosperity for the population then what use is that activity?

    • rubyduck

      After long and careful thought I concluded that GDP is useful for calculating the amount of tax that can be raised, and for very little else. Very relevant to governments running deficits, of course.

      We used to talk about the balance of trade, and (then) the balance of payments. I’m wondering what they will be agonising about in 10 years time.

  • anyfool

    These people who yap on about standards of living, then come up with silly charts starting from where their judgements will be best displayed never ever get to the nub of the matter.
    Showing wages and living standards dropping after a massive slump that occurred in 2008, which was on top of inflated figures by the previous government is a nonsense, what ffs did you expect.
    The national pie has grown since this lot took over but it has to be shared out by a much larger populous due to uncontrolled immigration, but no one will mention that unless they come out at the same time spouting the nonsense, that immigration adds to GDP when there has been plenty of evidence to the contrary.

    • starfish

      Hmm
      Were we all living in a land of milk and honey in 2008 then?

      • anyfool

        I did not say that things in 2008 were any good they were not, they went in 2008 from bad to worse, they were shown up as better than they were by as I said fiddled inflated figures, real wages have been dropping since immigration became a tool of government, used as voting fodder and as a wage restraint.

  • the viceroy’s gin

    Osborne’s recovery plan (based on monetary activism but fiscal conservatism) really is a plan for trickle-down economics.

    .

    Laddie, 3 years ago, when you first squealed with glee over “the cuts”, which existed only in your Cameroonian socialist fantasies, you were informed that there were no “cuts”, and that your Cameroonian heroes were merely executing Darling’s previous spending plans. You were informed of all this then, over 3 years ago, by those of us who actually check the data, and pay attention to such things, yet here you are today, spewing the same nonsense about Cameroonian “fiscal conservatism”. This really does beg the question: Are you a liar or are you just dumb?

    Laddie, no matter your lack of economic understanding, this is not “trickle-down economics”, which classically would involve tax cuts as opposed to your preferred Cameroonian tax increases, and the Cameroons’ massive and costly envirowhackoism, which were both pounded down upon a struggling people.

    In fact, your Cameroonian heroes are executing “trickle-up economics”. Or rather, let’s call it “torrential flood-up economics”, since your Cameroonian buddies are spending like there’s no tomorrow, pumping cash into their government and quangocrat buddies, and have exercised seemingly no fiscal restraint whatsoever on government growth. Torrential flood-up economics is accomplished by eroding the currency with QE, and impoverishing the people through inflation, even as the protected government class hoovers up all their normal volume of cash, so they themselves can prosper.

    It’s false to say living standards are stagnant, lad. They’re falling. Government’s living standards are the only thing that’s rising, thanks to your Cameroon buddies. Maybe you can stop deluding yourself and actually describe that, rather than fantasizing it as you’ve been for over 3 years.

  • sisyphus99

    What’s the point of asset rise when it will only benefit those with spare assets. My asset will only be realised when I dead or need a care home. In the mean time grown children cannot afford homes. As they say FUBAR!!!

  • Count Dooku

    You do know Fraser that wages lag GDP? Gosh, I thought this was a serious publication!

    • andagain

      Wages follow GDP per head. And that is stagnant. So we can expect wages to be stagnant for the forseeable future.

      • Daniel Maris

        Count Dooku seems to be a beginner in the dismal science.

        • Count Dooku

          Said our resident Marxist. I’m a qualified economist.

          • Daniel Maris

            A qualified economist who doesn’t understand what’s going on.

            Average wages have only followed GDP in the past because GDP has been rising substantially faster than immigration and because the immigration-fuelled population explosion had not fully kicked in and because we were benefitting from the sudden wave of cheap imports primarily from China into the Western economies.

            Anyway, wages are not the same as effective income. If house and utility prices are allowed to rise above inflation, if the tax burden is increased, then people’s disposable income falls – objectively they are poorer.

            We might have rising GDP but if it is all going into building additional schools, airports and rail transport infrastructure, to meet the demands of the immigration-fuelled population growth, then that GDP growth won’t be doing the general public much good.

            • Count Dooku

              You have no idea what you are talking about. The effect of immigration on average wages is there, but it is small. What drives wage growth is productivity. See 2003-2007 for example. Huge increases in wages but also massive immigration.
              One of the things that’s puzzled economists in this last recession is the low-ish unemployment and falling productivity. Given that, it’s no surprise wages have been falling. Why should anyone be paid more when they aren’t producing more?

              • Terry Field

                And a high percentage of the British produce nothing that is worthwhile, and tradable for value in foreign markets.

              • Daniel Maris

                See 2003-13…huge increase in productivity but wages back to what they were a decade ago.

                Equally go back to the 1930s when labour productivity was increasing by leaps and bounds but wages were not.

                My argument is that now a higher proportion of GDP is having to be deployed to pay for mass immigration and consequent population growth. Less is available for holidays, university tuition, personal transport, clothes…and so on.

      • Count Dooku

        GDP per capita has what as its numerator exactly?
        It is possible to have increased output with falling wages (2012) and falling output with rising wages (2011).
        As a general rule though, average wages do in fact follow GDP.

        • disqus_KdiRmsUO4U

          i believe it is possible for GDP to rise with no increase in real output at all.

          House prices rises Increased salaries payed to the public sector. and upper echelon private sector management.

          Stock price rises due to circulating financial activities.

          If so what use is GDP as currently constructed ?

          Am I wrong ?
          Me no expert but have lots of opinions lol

        • andagain

          As a general rule though, average wages do in fact follow GDP.

          Only if the population stays the same. But they follow GDP per person whatever happens to the population. And since the population has been going up faster than GDP it follows that GDP per person is falling. Therefore you should expect real wages to fall.

      • Terry Field

        And so they MUST be.

    • dalai guevara

      One of you is looking at the public sector,
      the other at the private sector, surely?

      • Count Dooku

        Not sure I follow, please expand.

        • dalai guevara

          1- salaries in the public sector lag GDP (how long did it take to see first cuts?)
          2- salaries in the private sector fuel GDP (should the economy ever grow again).

          • Count Dooku

            Yes the public sector’s wages tend to lag GDP.
            It is incorrect though to state that private wage rises fuel GDP. People get paid for their output. The more they produce, ceteris paribus, the more they are paid. You have it the wrong way around.

            • Alexsandr

              Not just to the count but a general point.

              What about the large amount of money that is sent home by migrant workers. This is money that is simply lost to the UK economy. This should be taken into account when assesing the benefits of immigration.

              • Count Dooku

                The migrants need to exchange GBP for their foreign currency. The GBP can’t be spent anywhere else so it goes back to the UK economy. It’s how the cycle works and the movement of money doesn’t end with the initial remittance transaction.
                If you were talking of USD then your point would have more force, as loads of countries use USD as a trading currency for non-US goods.

                • Daniel Maris

                  Maybe you need to go back to school and read a primer.

                  From the net:

                  “Another factor affecting the size of the multiplier effect is the
                  propensity to purchase imports. If, out of extra income, people
                  spend their money on imports, this demand is not passed on in the form of fresh spending on domestically produced output. It leaks away from the circular flow of income and spending, reducing the size of the multiplier.”

                  Buying foreign currency is the equivalent of buying imports.

                  http://www.tutor2u.net/economics/revision-notes/as-macro-multiplier-accelerator.html

  • dhrhfggf

    Immigration is the cause of all this living standards will never recover until we send them back

    Stop immigrants claiming benefits- http://epetitions.direct.gov.uk/petitions/54360

    • Russell

      As long as we can send all the Labour MP’s (and any from other parties) who opened the door to all the EU immigrants and the rest of the worlds potential terrorists along with them on a fleet of her majesty’s navy, and with the illegal immigrants held deep in the holds of those ships.

      • Terry Field

        The only useful thing for those slobs to do is to be employed to lie close together in lofts and act as insulation. Whilst they ponder their past misdeeds.

    • andagain

      Immigration is the cause of all this living standards will never recover until we send them back

      Like Idi Amin expelling the Ugandan Asians? I don’t seem to recall the Ugandan economy improving after that.

      • Daniel Maris

        No comparison. Uganda was poor and its people poorly educated. The Ugandan Asians were highly productive economically. In a community like the Somali community, 40% of the men are unemployed and very few of the women work. The community is effectively super-dependent on benefits – the cost is in the billions.

        • andagain

          So are these immigrants “taking our jobs” or not? If not, then their departure will do nothing to boost the employment rate of the native workers. If they are, then they must be better workers than the native workers they displace, and are quite similar to those Ugandan Asians.

          • Daniel Maris

            You think you’re clever don’t you? Why not take off the blinkers.

            What is happening is there is a Dutch auction whereby immigrants from all around the world are prepared to do a range of jobs at a much lower hourly rate and often to work with much poorer conditions than long established citizens. I don’t know whether they do the job “better”. In many service jobs, ability to communicate is important. With poor grasp of English, many immigrants can only give quite a poor service in terms of communication.

            But the issue isn’t really whether they can do the job better. No doubt if we opened our borders entirely millions of Indian and Chinese professionals could come to this country and perform a range of middle class professional jobs better (i.e. more cheaply and productively) than our citizens – engineering, accountancy, teaching and so on. Would you like that? What would be the point? – Why would we want to make millions of our lawyers, accountants, teachers, engineers, IT technicians, dentists and so on unemployed?

            You are promoting the economics of the madhouse.

            • rubyduck

              We made tens of thousands of our IT guys unemployed, or condemned them to management jobs, years ago. They started outsourcing to Indian companies about 20 years ago. Just about the time the beneficiaries of the initiatives of the early 80s, when we led the world in computing in schools, graduated.

              • Alexsandr

                outsourcing to India is rubbish. The guys there dont understand how british business works, so the specifications have to be very detailed compared to a spec for a british coder. Communications is difficult cos of the time differnces, and Asians dont question stuff so an important part of quality control is lost.
                Trouble is our coders are getting old. I am an analyst/programmer and the office where I work everyone is over 50. there is the ticking time bomb.

                • pdhan

                  “outsourcing to India is rubbish.”

                  Yep – and yet we keep doing it. I thought the trend would be reversed as India’s economy kept growing but with the slide of the rupee this seems unlikely now.

                • Terry Field

                  You are so out of date.
                  It is not outsourcing – industry and activity has long gone, died, withered;
                  The rest of the world makes for local markets and for export to captive overseas markets – of which we have become one – and at ex-factorygate prices Britain can in no way match. You are in a world of dreams – like most Brits.

            • disqus_KdiRmsUO4U

              Many if not most IT jobs are already carried out by Asians. Likewise with doctors.
              No I dont have any stats only personal experience.

              All IT recruits at the firm i worked were Asian.
              Firm has gone bust.

              Every doctor I have seen over the last few years has been Asian.
              I have a hospital appointment on 27th Sept …with an Asian specialist.

              As the unemployent/lowering rewards problems climbs up the social ladder watch the squealing start.

              • Daniel Maris

                I agree the squealing will start very soon.

            • andagain

              You think you’re clever don’t you?

              I think I asked a question which you don’t want to answer. And I think I would like you to give an example of a country which followed your desired economic policy and had an economic boost afterwards. Becuase I was able to very easily think of a country which followed your policy and then suffered a dramatic economic contraction.

              • Daniel Maris

                I answered it in my own way by comparing what was going on to a Dutch Auction. I didn’t answer your question directly because it is a silly question. Jobs don’t belong to anyone so they can’t be “taken” by anyone. But mass immigration has consequences, in my view mostly negative – certainly the sort of mass immigration sanctioned in the UK.

                • andagain

                  Then perhaps you would like to answer this question: Can you give an example of a country that followed your policy with success? Because I could certainly name a country that followed your policy with total failure.

                • Daniel Maris

                  There are countries that have followed various aspects with success.

                  Japan is a tremendously successful country which doesn’t rely on mass immigration to run a Ponzi economy.

                  I think Australia’s approach of taking illegal entrants to a Papuan New Guinea island will prove effective. We will have to see.

                  I would like us to adopt a Swiss approach. Switzerland has retained effective control over immigration even though it has allowed a lot of immigration. It is now bringing in more effective controls.

                  I am not against immigration. I am against mass, unregulated immigration which is what we’ve got at the moment however it is dressed up. I favour controlled immigration with guest worker status where necessary. I think only people prepared to suscribe to our values and who are already completely proficient in English should ever be allowed to obtain citizenship – and then only with a ten year candidate period during which it can be withdrawn.

                • andagain

                  I said “your policy”, which upon rereading this thread may be unfair. The post I originally replied to said “Immigration is the cause of all this living standards will never recover until we send them back

                  This was why I gave Uganda as an example of this policy of expulsion. But that remark was not written by you. Are you defending the expulsion policy of the OP on economic grounds?

                • Daniel Maris

                  No I am criticising your analogy with Uganda which is irrelevant.

                  Involuntary repatriation is to be opposed on moral grounds not pragmatic grounds.

                  I rest my analysis on citizenship rights.

  • patrickinken

    Labour is switching from one one dimensional theme (lack of growth) to another (fall in real wages). They obviously have a point – real wages have fallen – but surely any proper evaluation of the performance since 2008 should consider:
    1. Devaluation and high commodity prices have had a material impact on real wages.
    2. Devaluation has benefited GDP.
    3. The financial sector and the oil and gas sector have contracted for well understood reasons.
    4. Recoveries from recessions triggered by the bursting of bubbles have generally been long drawn out.

    • Mynydd

      “Labour is switching from one one dimensional theme (lack of growth)” They have been proved right. There are signs of some weak growth now that the government has started borrowing to stimulate growth particularly in the housing market.
      Devaluation is the result of QE keeping a low interest on the Government bonds which is the government’s policy
      The Oil and Gas sectors have contracted because the easy oil and gas in North sea is running out. The oil companies are not investing in the technology to recover the difficult oil and gas which are more expensive operating costs.
      At the last general election Mr Cameron/Osborne promised that the recovery would start immediately they took power and the deficit would be cleared in one parliament. What about the forth coming housing bubble fuelled by cheap money, what then do we start over again.

  • HookesLaw

    Another idiotic article from Mr Nelson. One which ignores the fact that over 7% was wiped of our productive capacity by the recession. Would Mr Nelson rather there were more jobless?

    Every ordinary person who owns a house owns an asset and it is a large asset relative to their economic footprint.
    According to the BBC there are about 17.5 million owner occupied houses in the UK so on a simple rule of thumb thats 35 million people who own a big asset.

    • Colonel Mustard

      But what about those who don’t own houses, who work hard for mediocre wages, whose spending power is constrained by taxes on everything and who pay exorbitant rent to foreign landlords? What about those young English couples who cannot afford to buy a house because over 80% of new builds in London are being sold to foreign investment, thereby artificially inflating house prices? I don’t know of any other country whose government could be so stupid or act with such crass and wilful disregard for the wellbeing of its own people. I am disgusted and ashamed by it.

      • Makroon

        In every mega-city in the world, the centre is occupied by the lucky minority, and the middle classes and lesser mortals live in far-off suburbs. Of course there are lots of pleasant smaller cities, where houses are much more affordable.

        • Noa

          Which is not the point being made. Try buying property in Saudi Arabia or 40 other countries around the world when you are not a national.

          • Count Dooku

            Per capita, the UK has more foreign investments than just about any country in the world. We also have significant holdings of foreign property as investments or holiday homes.
            Foreign ownership of property in the UK is not an issue as ther money helps to find developments that wouldn’t happen otherwise. What is a MASSIVE issue is our restrictive planning laws that have caused this crazy housing bubble. The UK is the only country in the world that saw a bubble but reduced the number of houses buying built.

            • Colonel Mustard

              Per capita that foreign investment has not helped many ordinary people. And we have all seen those “developments”.

              http://metro.co.uk/2013/04/23/britain-has-smallest-homes-in-europe-and-getting-smaller-claims-riba-3662318/

              Ordinary people are being ripped off, by the left, right and centre.

              • Count Dooku

                What about your pension? Or your savings and investments? You think “ordinary people” don’t own financial assets?
                Unlike the yanks we are particularly good at investing abroad. Hence the reason why almost every person with a pension will be receiving part of a £70 billion windfall this year from the sale of Verizon to take one example.

                • Colonel Mustard

                  I think you paint a rosy picture that many “ordinary” people would not be able to relate to at all.

                • Count Dooku

                  I’m sh*t at art so I’m not painting anything! I’m a purveyor of fact and a slayer of misinformation.
                  I agree with you that a lot of people may feel like they suffer from some effects of migration, but very often what they feel isn’t supported by the data (talking about economics alone here). They often understate the positive and overstate the negative.

                • Colonel Mustard

                  For many the evidence of the effects is empirical. Try going to some of the county towns that have been affected. It is obvious what has been happening. Just one example is the amount spent by local government and the NHS on translation and interpretation services as well as marketing benefit claims to foreigners. The whole charade is exploitative in two directions. I don’t blame the immigrants who are only taking advantage of what has been offered. I blame idiotic government and we have had that now for about 20 years!

                • Count Dooku

                  Then we are in agreement. Kind of.
                  I still think though that people overestimate the issues with migration. A simple solution to this would be to charge migrants for the use of services. Would be a b*tch to administer though.

                • Alexsandr

                  the translation should stop now. If people cant be bothered to learn English that is their fault.

            • Noa

              Conventional economic wisdom holds that to be a good thing. But that entirely discounts the destructive social and cultural consequences which native Britons are now experiencing.

              • Count Dooku

                Agreed. As a rule, I don’t argue on social issues as one man’s social paradise is another’s nightmare.
                I would point out though that the foreigners who own property in London are precisely the types of immigrants you want from a strictly economic perspective. I have family from abroad who spend at least 100k per annum in the UK on goods and services. They own a home here and pay council tax and some VAT. The true scenario is somewhere in the middle.

                • Colonel Mustard

                  Really? The foreign landlords who rent cubicles in converted doss houses to foreign workers and those impoverished elderly chucked out of hospitals as bed blockers?

                • pdhan

                  Well the wealthy foreigners (whom I assume you’re talking about) also help distorting the London housing market even more, keeping low and middle earners off the property ladder. London property should not be seen as an investment where you park your wealth, this should be discouraged.

                • Count Dooku

                  These foreigners buy the property from someone. What do you think happens to the GBP they use to buy it? It doesn’t sit under someone’s market.

                • pdhan

                  I assume you mean mattress. I also assume most of the purchase GBPs end up in another investment vehicle, or perhaps sloshing around the general economy – it doesn’t matter, what matters is that when property is seen as an investment vehicle it pushes up prices to the point where normal people can’t use them for what they were intended for, i.e. live in. Leaving properties empty should be discouraged, house building encouraged (let councils borrow and build) and planning laws relaxed.

                • Count Dooku

                  Yes I meant mattress. Edited!
                  I agree with you totally on relaxing planning restrictions and easing supply. I disagree that we should have government discouraging private investments though. If foreigners want to put their money in non-productive assets then that’s their problem. Rates are due a rise and lots of investors will get burnt.

                • Daniel Maris

                  Look at the ONS stats. The employment rate for UK citizens is 71%. The figure for Pakistani and Bangladeshi nationals is 46%! That is a huge difference, that is no doubt reflected in benefit take up. This is a cost of immigration. And it shows up the absurdity of the argument that we need immigrants to support us in old age.

            • rubyduck

              That’d be because we’re a tad overpopulated.

              • Count Dooku

                Not true. Not even close. There is overcrowding in the South East but it has nothing to do with overpopulation. It’s our mad planning laws and poor use of resources.
                New York has a similar population to London but actually has larger dwellings. Why? Because they built up!

                • Colonel Mustard

                  Which ignores issues of infrastructure and the provision of services and utilities. The whole thing is a house of cards very easy to topple as the tanker drivers strike showed.

                  Saying that overcrowding is nothing to do with overpopulation is a little bit naive a day after the announcement of a crisis with primary school places.

                • Count Dooku

                  Who provides primary school places and the vast majority of our infrastructure? The Govt!
                  It looks like you should be taking issue with them for not reacting to immigration or population growth. After all labour doubled public spending when the population increased by 10%. Where did all the money go?

                • Colonel Mustard

                  I am taking issue with them. I think the lack of a holistic approach to policy, especially to immigration policy, has been disastrous. It seems to stem from this ridiculous idea that “growth” will lead to all things to all men and everything will come out right in the end. Cheap labour is one thing but the negative effect on service provision and the drain in other areas of expenditure was ignored/disregarded/underestimated.

                • Count Dooku

                  My solution would be to get the govt out of a lot of service position, so people actually pay for what they use. This fixed the drain on te exchequer.
                  Also, don’t forget that the flip side of cheap labour is cheap goods for the rest of us.

        • sarahsmith232

          you obviously don’t know London. London is a part of the 3rd World. there’s no such thing as pleasant suburbs in London. there’s affordable places to live in London, quite a lot actually. only about a month ago a one bed was advertised in Canning Town for £110,000. CT is not v.far out but you would die if you lived there. throw a dart on a map of London and you’ll hit an area with an abundance of ex-local authority flats for £150,000 for a 2 bed. but again, if you’re not a muslim or an African you can’t live in these areas. they are quite simply a part of the 3rd world.
          no one has any idea about all of this. it’s being hidden from view. other morning watched as someone on telly commented on the ‘average joe on the Clapham Omnibus’ meaning average white bloke. only Africans and Asians on buses in London now. read David Irving say ‘this isn’t the view in pubs in Wapping’. thought does he not know, there aren’t any pubs left, never mind there being any English in them.

          • pdhan

            You obviously don’t know London either. Of course if a suburb being “pleasant” precludes any sort of ethnic minority living there then no, you’re correct – but that would mean you’re a bigoted racialist which of course you aren’t.

            My particular suburb in Lewisham is actually one of the cheapest areas in zone 2 and both leafy and pleasant. A number of pubs in the high street, all full of English people as you would surely know if you ever went to the pub – ethnic minorities don’t go there very much before they’ve been anglicised.

      • Alexsandr

        the rip off is taxes. Taxes on road fuel. taxes on domestic fuel (VAT and the gree subsidies) VAT on practically everything. Tax threasholds far to low. The 40% band should start at about £75,000 We need lower taxes, less government. Let people keep more of what they earn.

    • Makroon

      I don’t know who Fraser Nelson’s researcher is, but he needs to be moved on.
      This is a rerun of the “Shock, horror ! devaluation isn’t working !!” story.
      There are long leads and lags in the economy.
      Productivity has been falling as companies hang on to labour – there was never going to be real wage increases under these conditions.
      Now productivity has started rising (and some firms are having trouble recruiting/replacing leavers).
      Be patient Mr Nelson, wages will start rising shortly (as will business investment).

    • Smithersjones2013

      Well thats all very well but that doesn’t help people who have bailiffs knocking on the door because Osborne has allowed inflation to outstrip earnings and who has allowed that eejit Davey to implement the most damaging energy policy in living memory!

      Asset ownership is irrelevent (the value of those asset being controlled solely by the market) and not necessarily a good thing. How many of those you quote for example are currently in negative equity?

    • dalai guevara

      Owner occupiers don’t necessarily own anything at all.
      A significant number cannot even afford to pay off the mortgage.
      Those 2.6 million do not own anything.

    • Daniel Maris

      Lots of those are owned by people who are not UK citizens. In London most new housing goes to non-UK citizens.

      • pdhan

        No, prime central London property of £2m+ goes mainly to non-UK citizens (a problem indeed if they don’t intend to live there), but new housing this is not.

        • Daniel Maris

          The problem is at the high and low end. Asylum seekers aren’t made to live on the street. They are given housing. They are non-UK citizens.

          And non-UK citizens aren’t jsut in the £2m plus bracket. They are buying lots more in the mid range as well.

  • The BBC Sucks BBCs

    Wages have been flatlining for the majority since 2004 as a consequence of open door immigration creating a massive over supply of labour.

    • Mynydd

      Government’s do not supply labour, it’s agencies and employers that bring people into this country. Under the EU, there is free movement of labour, goods, and services. Labour, Conservatives, Lib Dems, and UKIP can only change this by leaving the EU. The last government introduced a points based system for workers from outside the EU, This is being followed by the present government.

      • anyfool

        The government lets them in, you do not need a points system if you stop it altogether, we do not need them, we never have, we allowed third world immigration in the first place through a pathetic guilt complex that some had about colonialism, them the rubbish in the last government allowed unfettered immigration from the third world to bolster their voter base.
        The EU is a red herring most are skilled and most will return home, the third world element will mostly stay until this country is as bad as the country they left, what a gift to our children, people like you have dumped on them.

        • Mynydd

          How many times must it be said when the Conservative government signed up to the single market the government cannot stop EU workers come here. Under the points system unskilled labour for non-EU countries will not be given access to the UK jobs.

          • Alexsandr

            yes we can. we simply leave the EU

            • Mynydd

              Yes we can, this is UKIP’s policy.

              • Alexsandr

                Sorry. which ‘this’ do you refer?

          • Nicholas K

            1) Free movement of labour long preceded the single market programme – look at Article 48 of the original EEC Treaty that the UK originally joined under.
            2) You fail to take account of the fact that a significant amount of the migration to the UK is chain migration based on the right to a family under Article 8 of the ECHR (which only the suicidal British Establishment interprets so generously). A 15 year old bride from Mirpuri might have “nul points” but that won’t prevent her coming here, and once given leave to remain/nationality, is free to add to the pool of unskilled labour.

            • Mynydd

              The original EEC Treaty was signed by a conservative PM without a referendum. It’s down to the government of the day grant leave to stay.

              • Nicholas K

                Sadly it is not down to the government to decide to whom to grant leave to remain. The very point of my earlier post was that the government has no meaningful autonomy over that question due to the ECHR, which as a matter of political reality, cannot be denounced by the government.

      • Smithersjones2013

        Actually when it comes to immigrant Labour then it is as much the government responsible for the volume of supply as it is anyone else. They are the ones who regulate (or not in this case) the flow.

        The Government is a signatory to all EU treaties so its responsible from that aspect as well

        Incidentally Swizerland which is signed up to the free movement of labour agreements that apply also the EU members (but granted is not a member itself) has this year implemented quotas on all EU member states.

        http://news.msn.com/world/switzerland-sets-quotas-to-control-immigration

        It begs the question why the UK is so reticent. Of course on the the key practical consideration as National Audit reported today is the Government are incapable of effectively controlling our borders and are more concerned about making sure Olympic tourists enter the country swiftly than in ensuring terrorists, illegal immigrants and illicit drugs do not. Today is yet another big fail day for the Government and particularly Theresa May!

        • Mynydd

          The government cannot control the volume of supply of labour from the EU. This can only be done by agencies and employers. When they put the interest of UK labour before the interest of EU workers then the flow will slow down. As long as it is more profitable to employ EU workers then the flow will continue to rise.

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