Gary's News and views

Gary writes a weekly article which appears in the Plympton Plymstock and Ivybridge News in South West Devon. The articles are published here.

 

Thursday 28 February 2013

UK CREDIT RATING

I make no apology for returning to the state of the nation's economy and finances. I do not think that the recent downgrading of our credit rating will make much difference, but it is clear that our spending reductions have probably not been brutal enough and we will have to keep wielding the scalpel between now and the next general election in 2015 and whoever is elected thereafter, no matter what they may promise, will have little choice but to continue to bear down on spending.

There is a cruel balance in most things. We were spending too much and borrowing too much for years – many years. It is therefore going to take many years to dig ourselves out of the hole we so carelessly sunk beneath our feet.  It is going to be a long slog. Some people are calling it the lost decade.

But it will not be a lost decade if we use these difficult years to make cultural adjustments. We must prepare the next generation not to make the same mistakes. We must rekindle the concept of saving – yes saving up for things - which in my parents' days was commonplace, and something I am very bad at. This basically means that if you cannot afford it, you did not have it. Ah, but what if my neighbour, my workmate, has got it? Tough.

I read a book once called the Richest Man in Babylon. It told the tale of a person who as soon as he started earning set aside 10% of his first pay packet and saved it. He did that for the rest of his life.  He never touched it and as the years went by the interest on his accumulated capital became a significant income.

The writer made the point that the step from being a non-earning pupil or student to starting work for the first time is a once in a life time opportunity to save. After all, if you earn nothing the week before you start work, 90% of your pay the following week will still seem like a vast sum of money.

Maybe we should teach all of our children this principle. It might help them to cope with the prospect of a smaller welfare state.

Some of my grumpier constituents will be thinking to themselves – that's OK if anyone can find work. I remind you that unemployment in this constituency is 1.1%, nearly full employment.

posted by Gary @ 11:24