Addressing the economy – Noel Grima

In the coming days, we will hear a lot about the economy. On this coming Monday’s Budget Day and after it, the airwaves will be full of government spin about how the economy is the ‘best in Europe’ while the Opposition says the economy is on its last legs.

The people, lost in this cacophony, find it very hard to make heads or tails of it all. Take the UK, for instance. At least there, they have the pound sterling to serve as a sort of weather vane. But we, anchored as we are in the euro, do not have this tool.

We have, like other countries, the figures for deficit and growth but we have become accustomed to government spin. Some people are happy because they have a job and they will be getting an increase come January.

Others, not necessarily from the Opposition side of the aisle, worry about where they will get the €10 per employee per week from and are concerned that it will hit their company hard.

To stay on this issue for now, it is difficult to understand how an alternative was not sought to what may become a worrying danger for the whole economy. The social partners had all agreed on the Cost of Living Adjustment (COLA) and they seem unable to unlock the entire process even when everybody knows what the consequences will be.

The government keeps insisting the COLA increase will be around €10 a week but one asks if the government itself has factored in what this increase will mean to its own already beleaguered bottom line. And the government is the biggest employer in the country and it keeps getting bigger.

The government keeps saying this will not be an austerity budget but then it is under pressure from the EU to get its finances in order. We have been hearing all sorts of rumours about measures that very much resemble austerity measures like switching off floodlights and street lighting after midnight. Such measures will have a devastating impact on the country just like the gloom that descended on Malta in 1973 as a result of the spike in oil prices, when the rest of Europe was rejoicing in light.

Speaking of oil and prices, the government took a gamble when it decided to absorb the increase in energy prices as a result of the war in Ukraine without knowing how much these prices will increase and for how long they will continue to rise, and without looking around for some alternative method to cope with the price increases. Remember that Malta, as against other countries, has no other source of energy and any incoming energy faces additional costs to arrive here.

Nevertheless, there are segments of our economy that are doing quite well such as the gaming sector and retail, while even construction and real estate, for all the concerns about overdevelopment and its associated problems, seem to be doing quite well if one just looks at the developers or soi-disant developers busy demolishing buildings and erecting others.

If we are heading into a crisis, we must ensure that the weak and the poor do not get more of a raw deal than the one they have now.

This is easier said than done.