A bullish chancellor will claim [today] that critics of his deficit reduction plans are at a loss to explain why the recovery is now taking place. He will point out that the spending cuts are at their deepest now owing to the backloading of the cuts programme.
He will point to evidence that shows in his view "the last few months have decisively ended [the] controversy" about fiscal policy — as those who advocate a so-called plan B cannot explain recent improvements in the economic data.
I wanted to splutter when I read that, but it's not polite so I swore instead.
Of course it is easy to explain why there is a so called 'recovery' now. There are three reasons.
Firstly unnecessary austerity depressed the economy so much that at some point some form of economic re-stocking had to take place. That is happening, but it's vital to note that the economy remains below its 2008 position and real earnings are so far short of what they are no claim of recovery is in any way credible.
Second, this is the result of the mis-spending of quantitative easing. I am not opposed to quantitative easing per se: in the new Green New Deal report we argue for green quantitative easing to be used to create specific investment in the economy. But the quantitative easing we've had has not done that. £375 billion has been used to create liquidity in the City so we have had share and commodity price booms, which have in turn led to a rapid recovery in bank bonuses and speculative gains for a few, often at cost to the many, not least through inflation that has been higher than necessary.
Third, we now have mortgage subsidies aimed at over-heating the market for existing homes rather than providing the funds needed for investment in the new homes the Green New Deal report highlights the need for.
So we have a failed economic policy followed by froth from what is little more than a bung from Osborne to his mates.
That's the explanation for so called recovery now. And it's also the explanation for it supplying benefit to such a small number of people. As Karel Williams ably argues in the Guardian this morning:
The rhetoric of "recovery" is part of the problem.
That's because this is a recovery for the few at long term cost to the many.
Now where's the opposition?
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If Osborne were a footballer manager he would have more in common with another George, who allegedly handed out brown envelopes at motorway service stations.
So in terms of Chancellors, in the last fifteen years, we have gone from Gordon Brown, Alistair Darling to a Brown Envelope Osborne.
How apt to have a “Brown Envelope” Chancellor for “Wongaland”!
“Firstly unnecessary austerity depressed the economy so much that at some point some form of economic re-stocking had to take place”
Fine by itself but that is not the argument that the anti-austerity left has been making for the last three years!…….It has argued that there can be no recovery nor will there be until austerity is ended. No one has been saying that a recovery will come about anyway so it looks like an excuse………
“but it’s vital to note that the economy remains below its 2008 position”
Not helped by the re-assessment that pushed the drop in the 2008 collapse even further down but I notice you ignore that. Plus with 18 months to go it is quite possible that the economy will be above the 2008 position before the election.
Do you really want this as a soundbite when that could happen?
As usual from you, complete prejudicial nonsense that ignores all facts
Richard,
An ad hominem attack does nothing to support your position…rebutt his position, not headbutt the man!
Thought you were better than that.
There are occasions when my limited time suggests some points made here are so absurd, trivial or just wrong that engaging with them is not worth the effort
This was one
We don’t want a recovery at all, in fact. We don’t want to continue our dependency upon the private banks for our money supply, even if for a while things might have seemed good while they were ladeling it out. That’s what a recovery to our previous seemingly affluent recent circumstances would actually be, a return to the banks ladeling out money but getting us deeper into debt at the same time. What we need is a new direction altogether, one where money is created into the economy as needed but not as debt. Let’s not forget that.
osborne’s illiteracy and condescension know no limits: ‘the sacrifices of the british people’-he means:’ the squandering of the wealth of our communities and its syphoning of to the finance world! It still staggers me how people can still witter on about increased housing as a sign of growth! Cloud-cuckoo-land as usual.
Fourth – the banks have given away / returned billions of pounds to jo public in recompense for the mis- selling of PPI, so they can have a mini spending spree- for now.
OK….agreed
The reason why there is some life in the economy at long last is simple. The austerity as such ended in the final qtr of 2011. ‘From the 4th quarter of 2011 to the 2nd quarter of 2013 government ‘current’ spending has risen decisively by an annualised £15.1bn’ [which is a bit more than the increase in GDP in the same period] which itself has supported a somewhat larger increase in consumer spending over the same period.Capital spending [GFCF] has fallen over the same period as has net exports so the reason why austerity hasn’t got anything to do with the recent improvement is because there hasn’t been any reduction in gov spending but rather an increase.[Current gov spending minus capital spending is a big positive number] Osborne is just playing silly buggers because he knows no one is going to bother figuring out what he’s talking about unless they are willing to look at ONS reports…or read Michael Burke in today’s Socialist Economic Bulletin, from whom I am quoting.
Or… “British austerity was even worse than you thought. Ã’scar Jordà of the San Francisco Fed and Alan Taylor of the University of California-Davis have a doozy of a working paper out on the macroeconomic effects of austerity. The chart above has the money stat: According to their numbers, the U.K.’s experiment with austerity starting in 2010 led to a 3 percent reduction in growth. If true, that’s a big, big indictment of the Cameron government’s policies.” I think it’s a bit like my attitude to the weather reports; if I want to know whether it’s raining or not, I just see if I’m getting wet…