Span has a good item and links on the exciting developments in the economy and far be it from me to try and dampen down any such enthusiasm however I think that some caution needs to be taken when looking at the figures, taking as an example the exciting news about new business start-ups.
The figure of over 460,000 is indeed good news but it's not actually a case of 460,000 new taxpayers joining the economy as a closer look reveals The analysis of those start-ups show that around 160,000 were started in London during 2011, unfortunately that was at the end of an eighteen month period that saw redundancies in the financial sector in London of 98,000, but at least the new businesses did exceed those who lost their jobs.
However the key figures are to be found within HMRC's own statistics of tax payers which shows that the number of people paying tax over the last three financial years has remained static when taking into account those people who have retired and are only receiving a state pension. In fact the HMRC tables show how remarkably static the job situation is in the U.K with the number of people paying tax having experienced its biggest increase in 2004-5 when the number of taxpayers increased by 1.8 million or half of the 3.6 million net increase over the past twenty years.
There may be more start-ups but these can be people who have been made redundant or those who are already in business but require an additional company or business to facilitate a new project. I had an example of the latter last week, two couples who already have their own companies are joining together to create a third company to service an MOD contract. The new company won't create any new jobs and won't result in any additional revenue for the Treasury yet it will appear on the 2012-13 list of new start-ups.
The unemployment figures don't really add much to our knowledge of how the underlying trends in the economy are faring in terms of its long term prospects. The tables show that during the period covered by these new start-up figures there was actually an increase in the number of people who were looking for work, something that bears out my theory about the financial sector shedding jobs. I think what we are seeing in relation to start-ups is a recycling of the work force, the news that in the second quarter the number of people in work increased is good news but again it must be viewed with caution because many of those 'new' jobs are part-time or self-employed people who are returning to work.
At some point in the next nine months (or possibly sooner) the economy will, hopefully, move forward and the Coalition are, like all Governments since the early 1960's, hoping that the housing market will be the spark that ignites the spurt. Whether that recovery is led by more people joining the housing market (the number of new mortgage applications is at a ten year low) or by people releasing some equity rather than paying down debt remains to be seen.