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British report British report
by Euro Reporter
2013-04-19 06:59:53
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UK unemployment rise adds to pressure on Osborne's austerity strategy

Unemployment jumped by 70,000 in the three months to the end of February, amid the lowest growth in pay rises since 2001, as pressure mounts on George Osborne to adopt a more aggressive growth strategy. The number of unemployed people reached 2.56 million, with 20,000 under 25-year-olds joining the jobless ranks, pushing the unemployment rate up from 7.8% to 7.9%. It was the third consecutive increase and the highest level since July. Britain's working population is also suffering from an austerity squeeze, with the average pay rise slipping to 1%, the lowest since records began in 2001 and well short of the 2.8% inflation rate. The figures, which reflect a reversal of last year's trend of falling unemployment, come after the International Monetary Fund this week urged the chancellor to ease his austerity plans and deploy more aggressive measures to spur growth. The Bank of England's decision to freeze its policy of injecting funds into the economy, known as quantitative easing, is also adding to the pressure on Osborne to switch to a more active economic stance. Minutes of the central bank's April monetary policy committee, released on Wednesday revealed a six-three majority in favour of maintaining interest rates at 0.5% and keeping the level of QE at £375bn.

The MPC has remained split for several months despite the governor, Sir Mervyn King, regularly voting for a £25bn boost to QE. King has lost the vote an unprecedented three times since February when he sided with Bank director, Paul Fisher, and external committee member David Miles, a former City economist, in calling for an injection of funds into the economy to boost lending and stagnant growth. Consumer spending in the economy has picked up in recent months, but analysts worry that it will peter out if the gap between pay rises and inflation continues to erode disposable incomes – a trend underlined by the latest data. The unemployment rate for 16 to 24-year-olds also remained a concern after it edged back towards 1 million. In the three months to February the number of young people out of work reached 979,000, pushing the youth unemployment rate to 21.1%, up 0.6 percentage points from September to November 2012. The number of people claiming jobseeker's allowance fell by 7,000 to 1.53 million provided a semblance of a silver lining, indicating a fall in government costs. However, a steep fall in manufacturing and construction output this year has undermined hopes of a strong resurgence in growth. Vicky Redwood, chief UK economist at the consultancy Capital Economics, said it was likely that further aggressive moves by the Bank of England would be delayed until after the new overnor, Mark Carney, arrives in July. The calls for further action are expected to grow when estimates for first quarter GDP are released next week, with the UK just one quarter of negative growth away from a triple-dip recession.

"More QE in May is still possible, especially if the Q1 GDP figure is worse than expected. But it may be that we have to wait until Carney arrives before the MPC will take more action. Note, though, that even those voting against QE this month still seem open to further action to boost bank lending, with the committee seeing merit in possible extensions to Funding for Lending." Howard Archer, chief UK economist at IHS Global Insight, said: "Despite a 7,000 drop in claimant count unemployment in March, the labour market data are clearly softer overall compared to a couple of months ago. "Overall, the data fuels concern that the labour market's recent strength is fraying as the economy continues to struggle for even modest sustained growth. Meanwhile, earnings growth remained very weak in February. While weak earnings growth is clearly helping to keep unemployment down, the flip-side of this is that it continues to limit consumers' purchasing power.

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Primary schools should teach money lessons

When should children start learning about money? In February the government announced plans to put personal finance on the national curriculum, a move which will see it embedded in both mathematics and citizenship education in maintained secondary schools from September 2014. This is a big leap forward and will make a real and genuine difference to young people's lives. But is it enough? This is the question that the Personal Finance Education Group (pfeg) has been exploring over the past nine weeks as we have drafted our response to the Department for Education's consultation on the new national curriculum. We have spent many years campaigning for the introduction of financial education in schools, and know that teaching children right from the start is the best way to help them build their knowledge and understand how to manage their personal finances later in life.

As well as providing a basis for future learning, early financial education can also be of benefit to primary school pupils in the shorter term. Young people are encountering money earlier and earlier in life. A survey conducted for pfeg in 2009 found that the average age at which children first have their own mobile phone is an incredible eight years old, while the average age that children borrow a debit or credit card to purchase items online is just 10. It would be no surprise if the average ages have dropped even further since then.

Add to these trends our increasingly cashless society, the proliferation of new technology and recent controversies over in-app purchases that have allowed children to run up large bills on smartphones and tablets, and the case for financial education from an early age becomes indisputable. We have just submitted a series of recommendations to the government to ensure we take this once-in-a-lifetime opportunity to get financial education right. Chief among them is for financial education to be extended to start in primary schools: we know that personal finance learning needs to start from an early age. This is essential in ensuring that children can build up their money knowledge and skills as they progress through the education system.

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Margaret Thatcher's funeral

Those of us perched high in the gallery above the south transept of St Paul's Cathedral were not best placed to spot the moment the TV cameras effortlessly picked up: when George Osborne, archetype of the "Thatcher's children" generation, shed a tear as the bishop of London praised his formative political hero. Unknown to us, Twitter went mad. Unknown to us, too, the march of the military gun carriage from St Clement Danes to England's national cathedral attracted respectable crowds, though less deep than for Churchill in 1965. As a 19-year-old-student, I was there. The grey day was much the same and there was virtually none of the predicted ("What a waste of money!") protest, shamelessly hyped by both sides. Reporters in the eye of an event are often at a disadvantage. Those travelling through Texas with John Kennedy on that fateful day in Dallas on 22 November 1963 found themselves inside a bubble as the president's cavalcade was mysteriously delayed. In the pre-24/7 media era they became virtually the last people in America to learn he had been shot.

But the cathedral was worth the respite from the wired world of social media and rolling news TV. The music was wonderful before, during and (Elgar's Nimrod) afterwards, and the stately ceremonials – all that dressing up and flummery, military and religious – magnificent in its distinctive way. Of all the day's misplaced bits of boasting it is still true that the Brits do these things well. There were two remarkable women inside Wren's great church, the body of Thatcher of course – no longer a stormy politician or an "ism" but "lying here, she is one of us, subject to the common destiny of all human beings", as the bishop of London, Richard Chartres, gracefully put it. The other was the Queen – just six months younger than her longest-serving prime minister – and paying rare tribute by turning up at all. Did she look smaller than usual at the side of her husband, tall and gaunt but still standing at 91? I thought so, dressed in black and stooped as she followed officers of the church she formally heads into the cathedral at 10.50am – just before the coffin arrived. Watching her it was easy to wonder how Queen Victoria must have looked, habitually dressed in black after her own husband, Prince Albert, died young in 1861. From the gallery it looked as if the service was conducted without the faults or errors that organisers always fear. The soldiers who gently coaxed the coffin, plus union flag and white roses, first on to the dais below the great dome, then off again, had it in their power to spoil the day with one slip. They didn't. The day's other player with the power to make or break the mood was not a politician – cabinet ministers past and present and their rivals were reduced to walk-on parts – but Chartres. A skilful speech, I thought, and from a voice more conspicuously commanding than Justin Welby, the second man to beat him to the archbishopric of Canterbury (in a lesser role here).

Thatcher's funeral was not the time or place to debate her policies and legacies, the bishop declared, before proceeding to ignore his own advice. This was a warm and witty speech, full of emphasis on her human virtues ("Don't touch the duck pate … it's very fattening"), but also a revisionist text. Her "no such thing as society" remark had been misunderstood, said Chartres. So it was, another politician misquoted out of pre-Leveson context. But in the process he was generous in his interpretation of her belief in "interdependence". It was a day for generosity, even tears among the faithful. But I gather Twitter was dismayed about that too. Back from St Paul's, I hope to learn more.

 


         
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