It the Riots Stupid!

Yesterday (29/11/11) the British Chancellor of the Exchequer (Finance Minister) delivered his Pre-Budget Report (PBR)/autumn statement. This is a half yearly assessment of the impact the annual budget has had on the UK economy. This years PBR was grim reading. It showed that growth was below target, borrowing was above target, inflation was above target, unemployment was above target and so on. Obviously this forced the Chancellor to set out new targets but no-one really trusts his predictions anymore. Most people now think the UK economy will be in recession the fourth quarter of this year and the first quarter of next year. In fact a lot of people are wondering how the UK economy managed to narrowly avoid being in recession during the third quarter of this year.

The answer to that is quite simple - the August riots. Although sounds strange the riots actually stimulated a large amount of economic activity. Most of what was stolen was eventually paid for by insurance companies and the looted shops went on to completely re-stock. Hundreds of construction workers got hired to demolish some damaged buildings and repair others. Then there was the army of solicitors, loss adjusters and accountants employed to help people deal with the damage and their insurance claims. It was even a boom time for criminal defence lawyers as thousands of people were arrested and taken to court.

It seems that the British government has already decided what it's next big trick to massage the economic figures will be. They're going to levy a second income tax on public sector workers and raid the pension funds to invest in large infrastructure projects. These include things like and extension to the Northern Line of London's underground railway and a new overground railway line between Manchester and Leeds. It is debatable whether these projects actually need doing but the hope is that the money spent doing them will be just enough to make Britain's economic figures look ever so slightly better then they actually are.

No wonder public sector workers are on strike today.