Pulling together

Europe certainly doesn't seem to be hurting due to the uncertainty of Brexit. The European Central Bank is extending quantitative easing to the end of 2018 in an attempt to keep a lid on the strengthening Euro. No such concerns for us, as the pound continues its slide.

Depreciation is not necessarily a bad thing, as it makes our exports appear cheaper - though this hasn't seemed to do much for our export figures. This shouldn't be a real surprise as the same lack of effect was seen the last time the pound tumbled in value. Explaining this is a bit more difficult, but the consensus is that our exports are generally not price sensitive, or they use a lot of imported components so a falling pound doesn't make much difference to their price when exported again.

However a weak pound should at least mean people will prefer to spend their money at home, so maybe our domestic economy will get a boost. Of course that relies on consumers having money to spend. Unfortunately the weak pound means imports are more expensive, pushing up the cost of living, and wages are not keeping up with it. Despite this people are sticking with their job even as pay falls, preferring a secure job to a possibly temporary pay rise.

So people have less money coming in. Up to now they have made up the difference by borrowing, and borrowing a lot - banks have been ordered to put aside an extra £10 billion to limit the carnage when people find they can't pay this money back. Essentially, your savings will be used to bail out bankrupts.

Understandably, as debts mount banks are turning off the taps, so now people are digging into their savings instead - in fact, households are now saving less than at any time in the past 50 years.

Sensibly they are also reducing their spending - consumer spending has been going down over the past five months. The downside is that less money is going into the economy. Businesses are starting to notice this, with manufacturing slowing and orders drying up. This then has a knock-on effect on businesses supplying other businesses, as projects are put on hold.

One way to counter this is to increase productivity. We have the highest employment rate since 1971, so the best option is for each person to produce more per hour. Strangely the UK has not improved productivity for ten years, while other countries have made great progress.

Improving productivity requires investment. Investment requires confidence in the future. So if the UK really is going to become an international trading hub our government needs to sort itself out pronto and start leading the country. We need to know what to expect, we need to know the plans in detail and be confident that the promises will be kept.

In the end it doesn't matter what colour the rosettes are, we need a government which pulls together rather than one that pulls itself apart.