Saturday, January 31, 2009

The true cost of the financial crash

UK unemployment is rising quickly. The last available data from the Labour Force Survey is for October, when the rate reached 6.2 percent. That number is going to jump when the December data is released.

Increasing unemployment is the last link in a chain of misfortune that started with reckless monetary policy. Low interest rates generated an unsustainable housing bubble. When it finally busted, it left in its wake a banking crisis, and collapsing consumer confidence. In turn, this led to a contraction in GDP and mounting job losses.

All UK housing bubbles have ended this way.


  1. The real rise could be due to "more flexible working" i.e. people working less days per week and less overtime.

    It's more accurate to look at income tax receipts.

  2. 3 million unemployed by christmas.

  3. I would say over 4 million: already, London has gone very quiet for January. It was busy up until the holidays, but now getting quieter by the day.

  4. Another of my friend laid off on Friday.

    There are a lot of middle class people losing their jobs, savings, houses right now ....

  5. "The real rise could be due to "more flexible working" i.e. people working less days per week and less overtime.

    It's more accurate to look at income tax receipts."

    The REAL RISE is people losing their jobs. I have not heard of unemployment rising because of more flexible working. More flexible working may in some, rare cases aid companies when they are growing (before they recruit additional staff).

    In my town the actual number of people unemployed has risen from 950 in May to 1,750 in November. The unpublished (but official) figure as of last week was 2,350. These are people who has lost jobs not because of more flexible working but because of their firms going bust.

    The companies that have gone bust or who have closed plants include Ceramaspeed (300-400 losses), Sealine (200+), Titan (90+), Woolworths (40+), and so on.

  6. I agree 3 million by Christmas.

    Though 4 million is probably just as accurate if you count those that are not counted - the hundreds of thousands aged over 60 who used to be counted before MIG/Pension Credit, those on training and those who close their claims when they do not qualify for benefits (such as the self-employed).

  7. "All UK housing bubbles have ended this way."

    Exactly. The key is working out how to prevent bubbles - or more fundamentally, to wean the home-owning electorate off the idea that rising prices are A Good Thing. They are not. They are a terrible thing.

  8. I closed my claim when it turned out that I didn't qualify for benefits. Amazing to find out you don't qualify for anything...
    Self employed will receive nothing because no Class 1 employer contributions. If your wife works then nothing.
    Basically its a fortnight trip to the job centre for absolutely nothing.
    So I should imagine, given the large number of self employed in the UK, that the real number of unemployed is much larger.

  9. What I mean is that the fall in employment is understated e.g. by companies paying for 4 days instead of 5 days per week.

  10. Very few self employed people know that despite paying thousands of pounds a year in tax and NI, even for decades when they come to claim contribution-based Jobseeker's Allowance they get nothing.

    This in turn adds fuel to one of the oldest complaints about benefits - that someone can get benefit having contributed nothing to the economy, but someone else (as above) gets nothing.

    AntiCitizenOne - see what you mean. Yeap short-time / temporary stopped are not counted in the official count. It is very difficult to give an accurate number. At our local JCP there are only 6 people claiming on the short-time basis, but over 200 are off locally at the moment. The system is simply too complicated, intrusive and unpleasant for many of these people to claim.

  11. Don't forget all the Polish etc leaving the country. Their jobs have gone too but won't show up in the figures. Their pounds earned are now being spent back home and not in the UK.

  12. I hope they have remembered to cancel their Child Benefit claims.

  13. Is it just me, but the traffic in London has become a little quieter. Thinking about the M25 at 7.30am in the morning.

  14. I agree: London has become very quiet. Was in Camden Market (usually very packed), now a pleasant and calm place.

    As for the current state of the UK welfare system, unemployment, British socialism, tosers like Tony Benn, as a self-employed person ineligable for job seekers allowance, I say this: I will do anything to provide for my family because I have no choice. Don't get in my way.

  15. M1 and North Circ. very quiet these days.