Thursday, 26 May 2011

George, even your buddies are telling you

Yes, George Osbourne's favourite economic body the OECD are telling him your cutting government spending to fast and too deep.

The OECD are predicting UK growth to be 1.4% this year and only 1.8% next year and with limited action on inflation, we can expect the average worker to see his or her living standards to diminish over the next two years.

Business net investment fell sharply by 7.1 per cent in the first quarter of this year, which spells disaster for Osborne’s plan of relying on the private sector to offset the drop in public spending.

With households beginning to feel the squeeze as the cuts, taxes and inflation are taking their toll, spending suffered an unexpected drop of 0.6 per cent in the first quarter. With the UK economy being traditionally a consumerist country, with household spending accounting for approximately two-thirds of the economy, it does not bode well for overall growth.

With the governments deficit at a record high for April at £7.7bn compared to £5.3bn April last year, so, a year after a new Conservative government promised to cut the deficit, it is still not managing that task.

This deficit increase is a direct response to the austerity measures, the economy is in the doldrums thanks to Conservative: 1) promises they would cut jobs and spending, which has increased uncertainty; 2) raising VAT; 3) being unwilling to pump money into the economy.

The government needs to get the economy growing again, to get tax revenues to above where they were before the banking crisis, instead we have no growth, falling real wages, widening inequality, weak trade figures, falling house prices and sluggish high-street sales.

The longer the Conservative government continues on the wrong path, the harder it will be to secure good jobs and increasing standards of living.

No comments:

Post a Comment