Yes I know there was snow in December.
Yes I know that gives George Osborne an excuse for worse than expected GDP figures.
But even being charitable it looks likely the UK economy would have flat-lined at best in the last quarter of 2010.
And let’s be clear — Ed Balls was right to say that this is the consequence of ConDem cuts reversing the trend to recovery that Labour left in our economy.
Richard Lambert, outgoing director of the CBI said yesterday that the ConDems were cutting without a plan, without consideration for growth and without consideration of consequences. Liberated from his constraint of needing to keep his membership happy as he’s now leaving he was, for once, right.
No pone denies there are issues to address in our economy. No one denies that resolving the legacy of neo-liberal economics — a malaise from which New Labour suffered but from which Labour must be cured in the future — won’t be hard. But reckless cutting, cavalier cuts and dogma driven redundancy is already driving hope out of our eco9nomy.
It’s true that once any political party loses economic credibility it takes time to regain it. Labour faces that problem. But lets face it — neither the Conservatives or Liberal Democrats ever had this credibility — neither did, after all, win the last election, for precisely this reason and despite facing a prime minister who was by then a lame duck.
And if now the economy goes belly up so rapidly after the ConDems reversed do much that Labour did to deliver growth — whilst bringing in borrowing much below expectation — then Labour’s record is going to be looked at in a new light. Especially if government borrowing now increases, as is likely.
I wonder what the odds of Osborne going in a reshuffle are? I’d think they’re getting to be one to look at for the punters out there. Not that I am. So please don’t ask me to put up a tenner. I don’t.
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Richard – at least try and be a little objective:
1. The cuts haven’t started yet. Nothing that the Tories have done since May has caused this decline in growth.
2. There could be an argument that it wasn’t the Tories actions but their lack of action that was responsible. But the only thing that would have had any effect in this sort of timescale is a fiscal stimulus. Labour had removed most of its stimulus as it was temporary and unaffordable – I think the praciticalities if not the rhetoric on this is pretty much agreed by most mainstream politicians – and the removal of the stimulus is the most likely explanation for the figures.
3. Labour have happily claimed credit for the quarters of growth in Q2 and Q3 as a legacy of their government. I don’t think that legacy ends when the first set of numbers come through that they don’t like.
If you think this downturn is purely a result of the threat of future cuts – then say so. But on this issue Labour were looking to make significant cuts in 2011 too – so on that basis again there is very little to divide the main political parties.
Let’s say a dirty word from the 1970’s: stagflation.
And, for good measure, ask an impertinent question: did we need the IMF bailout because of uncontrolled public spending, or because of a revenue shortfall caused by a collapse in tax compliance by big companies, the wealthy, and the top 2% of earners?
…And when will we see the mid-70’s attempt at punitive taxation of middle-to-high earners? Some of us are old enough to remember that the rich paid no tax until Lawson’s second budget, and remember all the engineers and programmers who went abroad. Not, I note, the super-rich and the skilful tax-evaders in the banks and in accountancy: they were largely unaffected by the punitive taxation of the seventies.
I know you have been predicting this for a while, but to see it actually happen is really bad news for the UK. To me there is no sense of glory that you turned out to be totally correct, instead just a deep sadness that were going back into recession.
For myself, I think that most consumers spent extra this Christmas than normal, because everyone was more than aware of the upcoming VAT rise. If they did not want to spend when a VAT rise was coming, what the heck is going to get people spending? (which seems to be the only thing that any government talks about – consumers need to spend us out of recession).
I too fear that the cuts are being wielded from a political ideal rather than a pragmatic “lets cut waste” perspective, which is dreadful news at times like this. I suspect the coalition may within the next few years, reduce the deficit by billions upon billions, but we will remain not in bouyant growth, but always hovering on the verge of recession.
It’s a difficult one isn’t it Richard? Many left minded people such as myself voted liberal because we were sick of the infighting, the lack of enthusiasm and the belligerent attitude of Labour in promoting their failed ideas such as PFI.
Don’t get me wrong, I agree that the ConDem policies would have Keynes and Galbraith spinning in their graves. We know the Tories’ faith in the private sector is irrational and naive.
But I also don’t want to see the country blighted so that the Government can be proved wrong. What will they do next? Call an election – I don’t think so. The best sadly I believe we can expect, is a gradual climb down as the Tories realise that they have got it wrong. If they lurch to the right, the coalition would collapse. To the left, ditto.
I have never felt so pessimistic about Politics as I do now.
It would take a lot for Labour to regain credibility. Having said that – the political system as it stands is what we’ve got, and Labour are the Opposition. Its up to the Labour Party to take the opportunity to show the respect to the electorate it failed to show before.
Rather than just snapping at the Coalition’s heels, and continuing the lies propagated by all major parties, Labour should be treating the electorate as adults and providing real information, and in the process openly admitting where it was wrong, previously.
Peter Mandelson, when pretty much in the driving seat, did not tell the public the real big business agenda to which we are being committed in trade agreements.
The most relevant part for people in the UK is the opening for transnational corporations to bring in cheap labour from around the world. IN ‘EU’ trade agreements, it is overwhelmingly the UK that will be affected in this regard. Because that’s what the Coalition is acquiescing in, behind the scenes.
If it’s bad now, with UK people limited in their spending, watch what happens when this hits and there is a wave of cheap onshore outsourcing, displacing UK workers on a broad scale.
Labour needs to call the Coalition’s bluff and its hiding of this information. Cameron and Cable have taken ‘trade’ delegations to India, but have failed to mention the trade agreement being signed up – and its implications for UK workers. And Cable was there again last week – but still keeping schtum on what is being secretly signed up.
If Labour doesn’t take this responsiblity and opportunity then it effectively continues to be complicit in tricking the UK public.
I.e. no change.
James, the Tories have done a lot since May to cause the decline in growth. Since day one they have made almost daily announcements about the huge cuts they are going to make, how difficult decisions have to be made, how painful it is going to be, etc etc.
Economies rely on confidence every bit as much as finance.
Every other sign in the economy is that the confidence isn’t there.
@James
I think that your argument is absolutely ludicrous
The Tories have delivered a budget – a devastating budget.
They have increased VAT
They have announced job cuts for more than 600,000 people. The result will be at least the same again lost in the private sector. They have destroyed business confidence in the process. They have eliminated the prospect of business investment. They have destroyed consumer confidence. They have guaranteed a downturn in spending.
They have announced an already begun to implement an NHS reform which was absolutely denied would happen in their manifesto. They are pushing it forward without any legislative backing. People are living in fear that they will have to pay the medical services—and there is almost no doubt at all that they will.
The Tories have no growth policy. They only have a policy for dogma. All they can make is a climate of fear. They have attacked the young and left 20% of them unemployed. They have destroyed the opportunity of access to education for many.
I could go on
And you say they’ve done nothing?
What planet are you living on?
Or do you live in some form of airlock bubble that makes you immune from interaction with the rest of society? I cannot credit that with a person with any form of common sense, left alone any ability to comment intelligently, could proffer your argument.