It seems almost unbelievable that the UK economy is still 3.5% below its level 5 years after the financial crisis began, when the US, Germany, France and almost all other major countries are now well above their pre-recession level, and that the UK economy has now contracted in 4 of the last 5 quarters and is very likely entering an unprecedented triple-dip plus loss of Osborne’s prized triple A credit status, yet all this and the latest -0.3% contraction passes with nothing more than comments from Ed Balls. When is the storm of anger and mobilised street protest going to break, to harness public opinion nationwide against an economic policy that is not only harsh and callous, but doomed – and the IMF, credit rating agencies, CBI, BCC and the Federation of Small Businesses all know it’s doomed?
It is genuinely hard to understand how Osborne’s dead-end policy when there is no apparent way by which it is possible that it could succeed, and when in terms of its central objective of reducing Britain’s debt and budlet deficit it is actually going backwards. Britain’s indebtedness has grown by £300bn in the last two and a half years because stagnation has shrunk government tax receipts and the deficit has consequentially grown by £237bn to service rising debt. When nobody, even Osborne himself, can plausibly suggest how this steady slide into endless austerity is going to be reversed, how conceivably does this policy survive?
What is extraordinary is that every supply-side device – interest rates on the floor at 0.5%, printing money (quantitative easing) at the staggering level of £375bn, throwing money at the banks through Funding for Lending (which the banks don’t then do), and Treasury guarantees to underpin infrastructure investment – have all been triumphantly touted only in the event to turn to dust. The one thing Osborne will not under any circumstances do is the one thing that will actually produce growth, that is recognise that Britain’s fundamental problem is not a supply-side one at all, but a demand-side management issue. It is really incredible that Osborne is being allowed to put Britain through all this agony because of this ideological dogma, yet Labour is almost quiescent about it.
So why is Osborne so fixated on supply-side solutions to the absolute exclusion of any demand-side intervention? It’s because the basic motivation of this Tory government is shrinking the State, privatising all services, and squeezing the public sector. The government’s expressed view is, the role for the State is to get out of the way and leave it all to the market and the private sector. It is this insanely tenacious clinging to this irrational ideology that lies at the bottom of Britain’s disastrous predicament. So why doesn’t Labour use this to hammer the government into the ground?
Michael Meacher MP
