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Storm clouds a-gathering

City announces jobs freeze as grim times kick in. But the pawn industry should do well, reckons Larry Neild

Published on June 7th 2010.

Storm clouds a-gathering

IT'S time to batten down the hatches as the financial storm heads towards the Mersey, and every other part of the country for that matter.

Prime Minister David Cameron chose Milton Keynes (why?) to announce every man woman and child in the Coalition-dom will feel the impact of cuts for decades.

Meanwhile the Labour group now running Liverpool has issued its own storm warning and pulled down the sails by initiating an immediate recruitment freeze, promising further tough measures.

The city turns over around 800 vacancies a year, from its 10,000-strong workforce. Now, any requests from officials to fill a vacancy would have to be signed off by a cabinet member after deputy leader Paul Brant described the city's finances as “grim reading”.

It’s dawned on us we’ve been spending money we haven’t got. If we spend a pound and a shilling and our income is just a pound it spells misery. I’m sure somebody else once said that.

Here’s an interesting thought to throw into the mix about GDP, that’s our Gross Domestic Product – the amount of money generated by the activities of each and every one of us.

In 2002, the slice of the GDP consumed by HM Government debt was around 22 per cent, now it is more than 60 percent and growing. That’s lower than many other leading countries, the USA and Japan for example.

During World War II we borrowed and borrowed and borrowed from the Yanks to bankroll Churchill’s powerful war machine. The percentage of GDP as debt as a result of our war effort rose to a staggering 180 percent. But do you know what – we survived and we are still here, no soup kitchens on every corner (at least not yet!). We finally cleared of the war debt in 2005.

Back in Liverpool, Labour will be eager to ensure the financial clampdown will not impact on front-line services or education. But the city council is at the mercy of the national government and in the emergency budget on June 22 expect to hear about massive reductions in the money sent to local authorities.

We pay council tax and at one time Liverpool had the highest tax in the land. But the reality is almost four fifths of what the council spends comes from Whitehall as Rate Support Grants.

Those war debts were partly paid for by purchase tax, a tax of around 25 per cent on so-called luxury goods, not essential to human existence.

Goods and items of furniture considered luxuries at that time would be the equivelent of what we today condsider essentials – things like dishwashers, dvd recorders, gazebos, conservatories, home exercise equipment.

Will Cameron and Clegg, the Batman and Robin of modern politics, opt for an increase in VAT to raise cash?

If they shelve or abandon key projects – new schools, new hospitals, a new Runcorn bridge – it will essentially put on hold our economic development, send unemployment soaring and cause misery for years to come.

Solution – empty the piggy banks and invest in pawnbroking businesseses. They will reap the rewards of what is about to be unleashed on all of us.

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