London
Fortune recently dropped two pre-paid tickets to London and a free place to stay about forty minutes out by train from downtown, so naturally, off we went. Being the whiz-bang accountant that I am, I calculated our costs per day, grossed up by 15 per-cent, transferred some money, and felt confident and happy to spend prudently but comfortably on our trip, secure in my accountant mind-set.
We were gone four full days and portions of two-the travel days. I had pre-calculated the domestic (Turkish) end, and was accurate to a fault on those predictions and budget. I was off, on the wrong side, by nearly twenty per-cent on the UK end. After my clever fifteen per-cent gross-up, which I had smugly thought, in my heart of hearts, would provide me enough left over to pay for the odd credit card purchases. For local transportation purchased at very good discounts available in England, entry fees (110 pounds), pick-up lunches and four decent, but by no means extravagant, suppers, a few souvenirs (30 pounds) including discounted cheese from the supermarket, we spent, with credit card charges, 738 pounds, or about $1,129 USD. My, my. Free airline ticket, free room. I must not get out much. This is not a travel article so I will jump right to it.
Britain is still reeling from the recent – er – economic downturn (can’t use the “D” word). Her official deficit is 159.2 billion pounds, which represents 11.4% of her Gross Domestic Product, up from 34.7 billion in 2006, which was then 2.6% of her GDP. I got these figures from statistics.gov.uk, although they are available elsewhere. Her debt, on the other hand, is 950.4 billion pounds, or 68 % of her GDP, up from 2006’s 577.1 billion/43.5% of GDP.
A full 27% of jobs in Great Britain are part-time.
What got me researching these stats was trying to find out what the “real” UK economy was doing. All I hear from my British friends is how they and theirs are suffering at every level, and have been for years. People out of work, increased working hours for the same pay, lessening of workers’ amenities like paid vacations, severe curtailment of the National Health Services with concomitant huge increases in the cost of private medical care, very bad behavior by politicians, unpopular involvement in unpopular wars, high housing costs, unreliable utilities, and, perhaps most seriously, long-term and shamefully ignored deterioration of the nation’s legendary public transportation system, most particularly the underground tubes of Central London.
We talked to people in the trains and on the tubes, in the restaurants, in the small town we stayed at, and residents of the charming residential area where we met friends for lunch. They all basically voiced the same complaints of our other British friends, and sounded very, very discouraged about the announced cuts in jobs and services to come. But then, the English do tend to grouse a bit.
Cut to Central London. We were there for four full days, and in addition to experiencing perfect weather, the old girl was positively buoyant. Plenty of tourists, people spending money, pubs full (well, the outside of pubs were full, with the smokers on the street with their pints), superbly-dressed office workers walking briskly to and from meetings and work. People talking deals, talking national security, talking BUSINESS. Construction everywhere, including on the tube systems. This looked very promising indeed, but somehow didn’t jibe with what we had heard and were still hearing.
I finally figured out, I think, why England and the Euro zone are so expensive lately. Pretty simple, really. The requirements of the EU for citizen services, such as free (or nearly so) medical care; paid vacations and sick leave; serious and effective mass transit; ecologically sound manufacturing and construction procedures; clean cities, etc.; all call for a lot of money. Also, with the expansion of the EU to include many less-than-affluent countries, the EU has committed to help with the costs of decaying or non-existent infrastructures to enable faster emergence into the EU world. Turkey is getting money from the EU, and we aren’t even a member, not by a long shot. Also, Europe as a whole is aging seriously, with more people every day getting too old to work. So, higher prices, more revenue.
Virtually all the EU countries have very heavy taxation, which moneys in turn go into public services as well as the United Nations, European Union, and other allies’ needs, such as the Afghanistan War. When there isn’t enough, you borrow, hoping there will be a deus ex machina to help pay it back.
This way of measuring a country’s economical health, the GDP, is a pretty awful way to tell anything about it, really, except that it is “expanding” or “contracting”. The GDP figure itself doesn’t allow for debt. It doesn’t look at savings or capital ratios. The figures are there, but the GDP is what drives markets, for good or ill. The figures provided by the UK government, and used for EU reporting purposes, don’t look that bad – unemployment creeping down, corporate growth rate looking cautiously positive and fairly stable personal spending. But when you look up the underlying figures for the debt and the deficit, things don’t look so jolly. And how much can that 27% of the work force working part time spend? Which makes the “stable” personal consumption figures mean something different; perhaps that spending is going down for many people, but enough are spending more that it appears stable.
Banks are, amazingly but typically, doing well, at least according to quarterly figures. But this healthy figure and the profits of many corporations is not trickling down, seemingly. And oil and gas production has taken a serious hit, surprise, surprise.
Well, what does all this mean? It means that is, what we did on our London vacation; went to see tourist attractions while trying to find out why all our friends were worried, while London was bustling, busy and beautiful. I think my husband said it well outside of Liverpool Street Station:
“Well, the balloon goes up and it floats nicely, but after all, it is only full of air.”
Not bad for a guy who’s not an accountant.
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Elsie Alan is a native Californian currently living in Kocaeli, Turkey and has a vast and varied background in finance and accounting. Elsie and her husband are currently in the process of finishing a house they bought several years ago. They travel frequently, both within Turkey and to other countries.Tags: accountant, Afghanistan, Afghanistan War, allies, banks, Britain, British debt, business, business in London, central London, corporate growth, debt, deficit, deteriorating public transportation, downtown, downtown London, economic downturn, economic health, effective mass transit, England, English, EU, EU reporting, Euro, Euro zone, European allies, European Union, expensive, foreign countries, foreign deficit, foreign spending, GDP, Great Britain, gross domestic product, heavy taxation, high housing costs, housing costs, infrastructure, job cuts, Liverpool Street Station, local transportation, London, London banks, London England, London trains, London vacation, mass transit, National Health Services, part time workforce, politicians, pounds, private medical care, public transportation, pubs, taxation in UK, trains, travel days, Turkey, UK, UK construction, UK deficit, UK economy, UK GDP, UK government, UK politicians, UK unemployment, underground tubes, underground tubes of Central London, United Nations
