Tuesday, 5 April 2011
So the truth is out
The idea that anyone should dream of making deep and far reaching cuts to public spending at the cost of millions of people that rely on those services is profoundly disturbing, yet those were the words that a Conservative minister chose to use describing what the Conservative led government are doing this year. The Organisation for Economic Co-operation and Development (OECD), has cut the expected rate of growth in this country to 1.5% for 2011, with the spending cuts being sighted as a reason for slowing growth. I have written many times before that the government cuts will make things worse. They push up unemployment, make people fearful about the future (therefore reducing spending – the main driver of the economy) and they reduce overall confidence. This causes a downward spiral since businesses suffer as people don’t spend, they lay off workers and reduce investment: the economy suffers even more. Despite the deepest recession since the 1930's the OECD states clearly the country debt is 12th out of 29 countries with only one member of the G7 group has a lower national debt, this despite Labour's spending to defend jobs and family expenditure between 2008-10. The OECD report on growth interim assessment of the G7 economies today forecast faster growth for the American, French and German economies that has not produced austerity budgets, and this country slower growth, with only Japan with slower growth. So with the British economy weakened by the austerity budget, our economy is more exposed to high food, energy and commodity prices (inflationary pressures)and in a weaker position to take advantage of growth of the world economies. We have to break out of this downward spiral, it is time for the alternative.