The Conservative Party headlines its Twitter account by telling us they have a Long Term Economic Plan and it is working. Chancellor George Osborne is continuously being photographed in meaningless photo ops wearing a hard hat and a High-Vi, no doubt paying homage to the type of productive work this millionaire Trutafarian would never do in a million years nor allow his children to do. George Osborne’s record is a dismal failure even in his own terms The chancellor’s claim to be ‘winning’ is bizarre. He has actually presided over the longest fall in living standards since the 1870s.
Chancellor Osborne’s argument that the U.K. recovery is a result of cuts in government spending is simply wrong on the facts. Nearly six years after the financial crisis put the United Kingdom into a deep recession, the economy has yet to fully recover and gross domestic product, or GDP, is still below its pre-crisis peak. The bottom line is this, in 2013 the UK economy was 98% of the size it was in 2008, Germany’s was 102% the size. Ergo, by every economic measure Britain and its people are doing worse than their competitors due to George Osborne’s failure.
The International Monetary Fund in its World Economic Outlook has now upgraded its forecast for UK growth in 2014 to 2.9 per cent, up 0.4 per cent from its January forecast. But that will be as good as it gets, according to the IMF, who believe that growth in 2015 will slow to 2.5 per cent, up 0.3 per cent from January, just in time for the election.
In his June 2010 Budget speech the Chancellor claimed “what is more, the forecast shows a gradual rebalancing of the economy, with business investment and exports playing a greater role”. Well, that hasn’t happened either. Oscar Jorda and Alan Taylor in their definitive paper on the issue estimated that GDP is 3 per cent lower than it should have been due to George Osborne’s misguided austerity.
The austerity program that reduced public investment and raised the national sales tax caused a contraction in GDP and reduced employment by shrinking the number of available jobs at a moment when private-sector demand was already weak. This policy, according to the United Kingdom’s Office of Budget Responsibility, reduced the level of U.K. GDP and has failed in other important ways.
The austerity measures not only did not help, they have prolonged the recession, contributing to high unemployment and a huge expected rise in child poverty. If the government had not slowed the pace of austerity measures and provided support to the housing market in more recent years, the situation would be far worse for families struggling to get by.
In the United States, similar to the United Kingdom, they know that they need more, not less, investment to grow the economy and make sure that they are making an economy that works for everyone and not just those at the very top. In the US, policymakers recognise that the U.K. so far has been a cautionary tale for austerity.
In their latest Economic Review, the ONS made clear that while aggregate output has grown strongly in recent quarters, GDP per capita has only recently started to turn up. While GDP has closed on the pre-downturn peak, GDP per capita remains some 6.1 per cent below the level in Q1 2008, and is only slightly higher than the level first achieved in early 2005. It is the worst recovery since the data were first collected in 1955. Far from “winning” Osborne has claimed this is an ignominious failure.
Any sort of growth, it seems, along with the prospect that the British economy might this year return to the size it was six years ago, is now enough to count as a political breakthrough. As living standards continue to fall for the majority in the slowest and shallowest economic recovery for over a century, it’s hard to see that being accepted as a “win” across most of country.
Even by their own yardsticks, Osborne and David Cameron have failed abysmally. Whether it’s the debt and the deficit, borrowing, growth, or the “rebalancing” of the economy away from finance, personal credit and the south-east, the pair have not even come close to meeting their own targets. This is a “long-term plan” that has already flopped.
Osborne promised to have slashed the deficit from £149bn to £60bn by now. Instead it’s expected to be £108bn, and he’s now planning to cut another £62bn to meet his original target – two years later than promised. The single most important reason was that the coalition choked off the recovery under way in 2010 with a savage programme of austerity that delivered a double-dip recession and three years of stagnation.
The Economic failure of Osborne and the Tory led Coalition is total and stark. No Government will have borrowed more in its 5 year term than the Coalition, more than Labour borrowed in its entire 13 years in power. Far from paying down the debt this Government will have increased debt year on year and it now stands at £1.27 Trillion. Far from reducing the deficit it is at a higher level than 2008. GDP has been depressed and productivity and living standards destroyed as employers have switched to low-wage, low-skilled labour, rather than invest to raise output and efficiency with the £750 Bn. cash pile British companies are hoarding. Far from being a “balanced recovery” what there is of a “recovery” is not based on productivity and investment but the dangerous short term fix of consumer spending fueled by record personal debt levels of £1.4 Bn. and an engineered property price bubble.
Bill Clinton famously said “It’s the economy, stupid.” In the 2015 General Election voters will prove that you can fool some of the people some of the time but you can’t fool all of the people all the time. They will not forgive and forget a Party and a Chancellor which has amply demonstrated we are not all in it together. A party which has gone to court to protect banker’s bonuses and pushed through tax cuts for millionaires while destroying working people’s living standards and targeting the poor and disabled. Voters will not forgive and forget nor will they repeat the mistake of voting Lib Dem to keep the Tories out. Boy George should prepare himself for the voters slaying the Tory Dragon.