Britain and the World economies

The Fiscal Responsibility Bill has been voted through the London House of Commons. It requires the British government to reduce their budget deficit of £178 billion (12.6% of GDP) in 2010 to 5.5% of GDP by 2013-14. This means that there will be a huge contraction of government spending in England in particular – because of a bias towards more money per head in those regions with devolved parliaments. That will inhibit Ireland’s export opportunities to our immediate neighbour. It will also mean that the £ Sterling will likely further devalue against the Euro particularly if Germany, France and Italy recover significantly. This is even assuming that Greece and Ireland stay on Euro life support. This merely compounds our difficulties.

 

It should be kept in mind that the Maastricht Treaty of 1992 requires eurozone countries to keep budget deficits within 3% of GDP and government debt within 60% of GDP or face fines. Ireland has to aim to close its budget deficit within about 4 years to within Maastricht – all in all not good news in the immediate future for jobs in Ireland.

 

In 2010, the World Bank forecasts that the world economy will grow by 2.7% in 2010 and 3.2% in 2011 having contracted by 2.2% in 2009. Rich countries will grow by 1.8% this year 2010, 2.3% in 2011 having contracted by 3.3% in 2009. China will expand by 9% in both 2010 and 2011. This crisis has shoved an additional 50 million people in the world into severe poverty. The world poverty line is $1.25 per day. The banksters did the world a huge amount of harm. The poor people suffered most as usual.