Economy

I was struck by the Financial Times article by Alan Beattie about promoting exports. http://www.ft.com/cms/s/0/2b8b272e-a4b4-11df-8c9f-00144feabdc0.html.

Of course when government spending is coming down, consumer spending on the slide and private sector investment slow to materialise what is left but exporting our way out of recession. This becomes more difficult though if other countries adopt a similar approach. The old assumption is that trade is not a zero sum game and that more trade benefits everyone. There is a certain truth to this but in the cold hard world of assessing GDP, trade deficits are universally bad and if some countries have a large surplus it follows that others are in deficit.

What answers are there to solve this conundrum? A weak currency makes imports expensive and makes our products more competitive but at the expense of inflation. Holding this together is going to be tricky but I see no alternative but a slightly weakened currency which erodes the overwhelming national and personal debt in the UK and continues to prop up exports. However the inflationary pressures may be impossible to manage fuel, food and  other vital elements need to be imported which will add to all this.

It is no surprise that faced with such difficult economic choices a coalition was the natural choice. In 1931 the near collapse of the economy and a tough choice between higher tariffs and lower benefits resulted in the collapse of a Labour government and the establishment of the last coalition to govern the United Kingdom. This coalition, the National Government of 1931-45, was not, as was widely discussed following the election,  a product of World War but was instead the reaction to a period of extreme economic danger.