Reforms to Employment Rights Proposed

George Osborne has announced proposals to make it harder for employees to seek an employment tribunal. Individuals will have to pay £250 in order to lodge a claim and further £1,000 if the hearing is granted.

Whilst the proposal is clearly designed to prevent bogus claims, it is not a well thought out plan as genuine workers who have been unfairly treated will find it difficult to bring their case to the courts. The government should be focusing on keeping people in employment and place more emphasis on reducing unemployment in the UK. How can we expect a recovery if the UK population is not employed and paying taxes? The turmoil in Greece stems from high unemployment and the fact that only a small percentage of the population pay taxes.

Growing Inflation and Reduction in Consumer Spending in the UK

The continued squeeze on consumer spending power is beginning to take effect in the UK. Consumers already face rising gas and electricity bills and can expect ever even larger increases in the winter. High inflation combined with government cuts and rising unemployment have led to a large drop in Retail sales over the past 12 months.

The 20% VAT increase and rising power prices have further exacerbated the problem. Housing prices have begun to increase together with a marked increase in rents, particularly in London. It comes as little surprise therefore that the Bank of England has decided to pump more money into the system through quantitative easing. We are still some way off a recovery. Some of the Banks suggest that the market will pick up in late 2012, but they tend to provide the optimistic stance on such matters. The growing uncertainty over Europe brings a cloud over the issue. The markets are unlikely to pick up until a sensible decision is reached by the EU over how to tackle the crisis. Some tough decisions need to be made but the sooner a decision is reached the better.

Growing Concern over European Bailout

David Cameron expressed concern over the European Crisis in his recent speech in the Commons. This comes after recent news that European ministers have failed to reach agreement over the plans to expand the European Bailout to nations such as Italy, Spain, Portugal and Ireland.

Many see a Greek default as inevitable as the country is clearly not able to repay its debts. The implications that this will have on the European Banks remains to be seen but Credit Rating Agencies have been quick to reduce the credit score of a number of major Banks over recent months. There is a strong possibility that Greece will be booted out of Europe and the Euro could collapse altogether. A sensible approach could be to limit the Euro to a smaller band of nations.

The Italian economy has also come under scrutiny of late. Standard & Poor’s have recently downgraded Italy’s A+ credit rating and Italy has been unable to flog its bonds to China. Italy has shown little growth for some time now and is beginning to show signs of distress. It is argued that Italy has struggled against growing competition from Asia and has been able to generate the entrepreneurial growth is needs. Whether Silvio Berlusconi is the right man to lead Italy to recovery remains to be seen.