All the talk has been of late upon the mass spending cuts and the possibility of QE mark 2. Why? Because the UK needs to cut its deficit, and because the financial based UK market appears to be starting to struggle once again. But are spending cuts and QE2 the only options to help bring the UK’s balance sheet back into order and return the UK to growth?
Well I say no, as though spending cuts are needed, I feel that there is an option available that could aid these cuts that should have been taken advantage years before now.
The UK North Sea production has been falling year upon year, and the UK coal production has been steady at a very low rate since 1992 when the UK coal industry was basically ended by the UK government. This means that the UK must import all its commodities, oil, gas, copper, iron, diamonds, coal etc. This amounts to a large amount of money leaving the UK every year via imports, with UK exports not anywhere near making up for this deficit. Worse, as the North Sea begins to dry up this deficit will only grow, but it does not have to be this way, as if the government were willing, the UK could become so much more sufficient, and get much more resources out of the ground. To explain, it is possible with government backing that the UK could substantially increase oil and gas, and coal production. In terms of where this money could come from, why not use the tax money earned from the North Sea which is a mere US$2.5-$5bn a year depending on the oil price, thus unlikely to make much difference to the coffers when considering the benefits it will bring. To explain:
UK Coal industry
The coal industry died in the UK in the early 1990’s, to explain why. Initially in the 80’s the government wanted to close some non-profitable mines, and whether they were right to do this or not (I am abstaining from any opinion on this matter as it is not the point), the fact remains that the unions went too far in fighting this, and in the end forced the government to fight so hard that there was no real coal industry left in this country. The final act of this war came in 1992, when Michael Heseltine, then President…