There may be trouble ahead

Now I’m not an economist by trade nor training but in this day and age of Google and Wikipedia, educating yourself is far easier than it ever has been before.

The odds are that we’ll have a hung parliament in a few months. Despite the tempting mental image that this conjures in light of the expenses and other MP scandals of late, this is not a good thing.

There’s a good chance that the UK would lose its triple-A credit rating because investors would more than likely view a fragmented government as being unable to form a concerted and focused effort to get the country’s finances back on track and thus making it more expensive for the country to borrow money. As has happened in recessions of the past the feared double dip looms large. Whatever happens in the election, I think that a rise to 20% VAT is inevitable this year and despite being kept at a historical low of 0.5% once more, interest rates will obviously rise again.

While greater than expected, a 0.3% rise in the economy is still little more a statistical anomaly when taken in the bigger context rather than any concrete indication that the worst is behind us. The spin that we’re out of the woods is just that.

I don’t want to spread fear but it certainly does look like the UK is in a heap of trouble and many people far more versed in this kind of thing think that we’re in for a long Kondratiev winter and choosing when to start the serious and inescapable cut backs will make a massive difference to the outcome.

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