Sunday, 24 October 2010

Back to where I started

Some may find it hard to believe, but I wasn't political until I left school, I and my generation was the recipient of Mrs Thatchers remodelling of the British economy and the brutal economics of Milton Friedman as interpreted by the likes of Keith Joseph.

I have read and listened to much in this last week about George Osborne's Comprehensive Spending Review, much detail has yet to be explained in detail.

The sad facts of this review is that as the Institute for Fiscal Studies say the poorest in society will pay the highest price, yet this deficit reduction plan had little to do with their sins.

The recession was caused by the banking and financial sector that over reached, before the banking crisis struck virtually no political leader was calling for greater regulation of the financial markets and both then opposition parties were criticising labour for not spending enough on education, health and defence.

Yet without the actions of the last Labour government saving at least three British banks, pumping money into the economy and boosting demand, we would be talking about a depression, a completely different ball game to the current deficit, as Will Hutton says our national debt has been higher proportionately for the last 200 of the last 250 years.

I was interested to read Britain's Noble prize winning economist Professor Christopher Pissarides saying "the chancellor has exaggerating the sovereign risks that are threatening the country."

Most economists seem to accept that the coalition government has embarked on a economic experiment. Cutting about 500,000 jobs in the public sector, with other job losses in the private sector as a consequence of public sector cuts. When the last recession it look 6 years to generate 1.2million private sector jobs of which 900,000 of these jobs were in the financial sectors, this time it's projected the financial sector are going to shed 200,000 jobs, it appears the government are reducing 60% capital grants for affordable housing, so fewer jobs there.

Even businessman like Arup who support Osbournes cuts are making 600 people redundant in the UK.

From 1993 to 1999 the private sector generated 300,000 in sectors other than finance, so is it credible that the private sector can produce 1.2million jobs in the next 5 years.

The Japanese in the late 1980's tried this approach to restructure the economy after their property boom and led to a decade of austerity, the Irish republic cut the public sector and this has led to negative growth.

I suspect George Osbourne will be more like Keith Joseph, if I right, I rather fear for the coming period.

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