It is not just private consumers who are supposed to rush out and spend because of the "confidence" engendered by the austerity measures: one of the other assumptions is that as public sector jobs are cut, the measures will improve the business climate and so the private sector will invest and create more jobs than are lost. As the banks were supposed to take the bail out money and invest in business so business itself is expected to contribute to that investment as well. We already know that the banks have done no such thing: and we now have the evidence that the private sector companies have not either
According to the Financial Times uk companies dividends to shareholders rose by about 20% last year. There are some things which are one off changes but even when those are stripped out the report estimates "underlying" dividend growth at 12.8 percent. What is paid out in dividends is not spent on investment which creates jobs: though arguably the shareholders will spend the money and that will indirectly help. But as noted before, rich people do not spend all the money they receive. The same measure forecasts dividends will grow by 11 percent in 2012.
The government would like us to believe we are all in this together. We obviously are not. The rich are doing very nicely, between huge increases in directors' remuneration reported at Xmas (49% was the figure reported) and now this for shareholders.
If companies are worried about their viability one would expect them to invest to improve their competitive position; or to save so they have a cash cushion if they think there will be a reduction in profits through low demand: but no. They have a lot of money and they have given it to shareholders
The other interesting thing in this report is that dividends increased over all sectors but in the UK there is distortion from the behaviour of some very large companies: Just 5 accounted for about 1/3 of the increase. It is worth noting that one of those was Vodaphone. Vodaphone, you will recall, does not pay tax. It was one of the companies which reached a very beneficial deal with the tax officials so they do not have to pay any penalty for refusing to pay, and they are given a very long time to pay the actual tax owed. This is not their money, in other words. Nonetheless they are the single biggest dividend payer in 2011.
http://www.thisismoney.co.uk/money/news/ar...f-6bn-bill.html
