Sunday, 27 January 2013

Mr Osborne knows best!

I sometimes wonder when I listen to discussion about 'the unemployed' and 'getting tough', or about 'strivers' and 'shirkers'  whether we appreciate fully the seismic impact of the financial crisis on British businesses and jobs. In the space of 12 months in 2008/09 a staggering 220,000 companies went out of business with the loss of 1 million jobs.  What is needed is investment and the creation of new jobs. What is not needed is cuts in spending. Cuts in spending further contract the economy and increase the deficit in public finances through loss of tax revenue. The way out of recession is to get people back to work productively, spending in the high street and paying taxes.

It all seems obvious. It isn't the equivalent of economics rocket science. Many have been saying it. The tragedy is the coalition and the political consensus signed up to the idea that the deficit had to be cut. The deficit was not the problem. It was if anything a symptom. Now we have chief economists at the IMF saying what we knew all along. Not only should there have been a plan B, there shouldn't have been a plan A. Plan A, a slash and burn of  public spending and services, is doing dreadful damage not only to economic recovery but to the people most affected, the poorest. 

But what is Mr Osborne's response to the Chief economist at the IMF calling for change in approach? He rejects it. "I don't think it is right to abandon a credible deficit plan," he says. He is concerned about losing credibility should the government now change course. Credibility? With the economy likely to move into triple dip recession there is no credibility. The only credibility is that of saving face; of not admitting that the coalition have got it so terribly wrong. So we are set to continue with policies that are clearly not working.


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