The UK economy remains in the doldrums with no immediate end or solution in sight.
Last week Chancellor George Osborne delivered the Autumn Statement, and while nobody expected any ‘rabbits out of hats’ magic, the bleakness of the impending Northern winter was reflected in the outlook for all matters economic.
The Bank of England has clearly already run out of monetary policy levers to try and jump-start the old waggon that is Britain’s economy.
And now Mr Osborne has revealed austerity measures will continue until 2018 and well past the next election in 2015, which was the intention of the Coalition when it outlined a post-crisis roadmap for Britain in 2011.
The best the Chancellor was able to offer was a continued shrinking of the overweight public sector to free up funds for schools and infrastructure (roads).
But people don’t care at this point in the cycle for better roads or an extra printer at the local primary school… people want jobs, and the government’s efforts to deliver this have thus far failed.
A Welfare to Work scheme has cost the British taxpayer £435m to date, yet it’s only been able to find enduring work for limited numbers of job seekers.
Only 3.5% of people have found a job for six months or more as part of the scheme – missing the coalition’s 5.5% target.
Figures, which cover the 13 months from June 2011 to July 2012, reveal that of the 878,000 people who have joined the programme, only 31,000 found a job for six months or more.
To provide jobs, however, the economy needs growth yet it is now expected to shrink marginally for the 2012 calendar year (-0.1%) after a series of downgrades throughout the year and such positive expectations at the beginning of this Olympic and Queen’s Jubilee year.
In 2010, Osborne himself predicted growth of 2.8% for 2012.
Meanwhile, the government (supported by the media) is on a seemingly tax recouping crusade – chasing down tax near-evading celebrities and companies.
But any uptick in revenue to the Treasury doesn’t directly take the economy off life-support.
The fact the financial services industry was allowed to swell to an unhealthy proportion of the economy is now biting hard.
Banks and financial groups are slashing jobs left, right and centre as a variety of factors drive their business activity and margins southward.
Financial jobs in London’s Square Mile and Canary Wharf have shrunk from 354,000 in 2007 to 237,000 as we move into 2013, according to the CEBR.
An obligation to hold higher capital ratios, a more onerous regulatory environment, the suppression of investment banking activities, weak markets et al are all combining to indicate there will be limited to no growth in banking and financial services for some time to come.
So what is the alternative to creating jobs? Dust off the rusty old factories from a bygone era?
No. And while UK manufacturing has actually been performing relatively well for the past few years, the car industry being a good example, the government is having to look elsewhere to stimulate new job creation.
Economic programmes need to be grass roots in the modern era. Government’s need to engage in urban warfare; it requires house-to-house, business to business combat to stimulate business growth.
A good example is in London, where the Old Street area towards the north of the central business district is to be given a £50 million makeover to become a centre for technology start-ups and entrepreneurs.
As part of the announcement last week the Prime Minister, David Cameron was quoted saying “the UK is in a global race and I am determined that we as a Government continue doing everything we can to equip the UK to compete and thrive in that race.”
It is a race and the challenge for financial services is whether a battered and bruised and clipped-winged UK industry will remain at the forefront of global financial events or slip down the pecking order and with it the disappearance of more people’s jobs in the process.