It's extraordinary that George Osborne thinks that he can use Portugal's woes to justify his economic policies.
As the Guardian has reported, he's argued that Lisbon's debt crisis is warning that those opposed to the British government's deficit reduction plans were playing "Russian roulette" with UK sovereignty.
This is nonsense.
Portugal is a small, low income. peripheral state in Europe. Like Greece and Ireland, it is unable to deflate its currency to get out of this crisis as would be logical for it to do when it is so obviously suffering in comparison to Germany. The result is obvious: it has no choice but to, in effect, default - otherwise called a bail out.
The UK has its own currency. It sets its own interest rates. Its currency is a reserve currency. Its debt is long term and has a strong and ready market. The UK is not peripheral in Europe - it is still a mjor trading economy.
It is an insult to the intelligence of people of this country to compare Portugal, Ireland and Greece to the UK. The comparison simply does not exist.
But there will be a parallel - cuts are pushing the UK in the same direction as these states. That's what's really worryinmg.
There is only one way out of a recession of the sort we have - and that is for a government to spend more. Osborne is sucking money and demand from the Uk economy at the very time he should be injecting both. His goal is to head us in the same sorry direction as these countries. It's the job of those who realise that to oppose him.
Labour should be at the forefront of the demand for spending, now.
We still need a Green New Deal. Osborne is just promising despair.
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This is typical of the way politicians now speak to the public. They favour a kind of falsely homely terminology (‘maxing out the nation’s credit card’ etc) that infantilises and disables debate. They also now assume that they can, in their public comments, get away with the most amazing illogicalities and inconsequentiality. Thus, not long ago, we had a health minister, challenged with the fact that NHS outcomes with cancer and heart disease were set on current trends very shorty to overtake other European countries, say he was not interested in the future, only in the present because no-one could know what was going to happen in the future. In which case, one might ask, how could one justify making any sort of change at all?
Presumably your rationale for more spending is based on the earn/spend cycle and Keynes mutiplier effect
But this argument does not hold if all public procurement contracting is liberalised and if the regulations are set up for firms to then bring in their own workers, whether its under ‘free movement of services’ within the EU, or intracorporate transferees from outside the EU, notably India, as the current Points Based System allows, without numerical limits.
Trade Agreement commitments being lined up will mean we are tied into this situation for ever.
The cuts agenda is certainly going to be forcing managers, public and private, to go for cheap onshore outsourcing, through these means. That’s why the privatising/liberalising agenda is being falsely connected to the ‘cuts’ agenda. But this the direction of travel anyway, if its not identified and addressed.
It is those channels that are the problem.
Current UK regulations actually encourage the use of such a labour force over UK workers – v low wages made up with ‘tax free expense’, to meet a low industry norm wage anyway, even below Minimum Wage, and then no NI, This is especially the case with shorter term – so the government only talks publicly about those coming for more than a year for whom there is a higher wage requirement.
In 2008 one third of Polish remittances were coming from Ireland – so not only all that cash leaving country- but the cheap labour supply must have fueled the whole housing bubble – with huge profits for some – like the Olympics here.
Now , look at Ireland, and your Green New Deal colleague, Larry Elliott writing about what a cool place Poland is…
So – even a turnaround in ConDem policy (!) needs these issues to be addressed for your ‘Green New Deal’ to work. So it would be useful if you and the rest of the green elite came out of dreamland and got real on this, and spoke up on it, esp before irreversible trade deals are done.
Because what you are suggesting does not hold water without this consideration.
@linda kaucher:
V roundabout way of saying that the expenditure multiplier is low because the wage bill mainly leaks abroad to rest of EU. But even if this is the case (no evidence cited), because the EU is the main purchaser of UK exports, the expenditure multiplier should ideally include a component to recognise that part of the foreign wage bill finds its way back into our exports. This effect would be picked up by a simple UK trade matrix.