Monday, 12 September 2011

The Pain has just begun

Today the Institute of Fiscal Studies reported that household incomes has fallen sharply 2010-11 saw the biggest fall in net household income since 1981.

The impact of public spending cuts and tax rises on UK household incomes will be felt for up to 10 years, as the worst effects of the recession are yet to be felt.

In the most recent financial year, earnings, state benefits and tax credits all fell in real terms.

This is a direct impact of the governments Austerity packages, they have cut demand by cancelling government projects, they chose to increase VAT to 20%, and cut benefits to low income families, they chose to reduce the public sector.

They chose to reward big business with corporation tax cuts, yet small businesses claim the reason why they cannot expand is the banking system refusing to lend money for business investment. Corporation Tax cuts will benefit Banks by £20 billion in this parliament.

We see our fuel costs rising dramatically, this because of lack of competition, the fuel companies behave more like a cartel, increasing diversity would offer a better deal for the consumer.

Like wise the banking system, we need a much more diverse banking system, we need the government to establish investment funds and innovation funds and invest in the new green technologies, only by economic growth can living standards will increase.

My eleven year old nephew told me "you know it is a matter of tax and not spending", I thought he gets it, the reason for our deficit is the falling off a cliff in tax revenues, if we do not grow the economy, boost the new economy and new industries creating new jobs, then the circle of lower tax, more cuts meaning more and more of the same.

Now of course the deficit cannot be ignored, but under Osbourne's Austerity plan we could borrow as much this year as last, so the cuts and tax rises have made no difference, it is time for a change of policy or a change of government.

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