In my family the phrase ‘Always expect the unexpected’ invariably gets the response ‘But if you expect it, it is not unexpected anymore’ – okay, seems lame to you but it makes us laugh.
Unfortunately, it seems like the Conservative Chancellor George Osborne has devised the coalition’s economic policy around a game of expecting something unexpected – that public spending cuts will produce economic growth – and it’s really not funny at all to the millions of people in this country who are coping with the consequences.
Economic cycles are nothing new. When recession hits, the private sector is unable to borrow and invest, so it makes the problem worse. It’s the worst time for the government and public sector to make deep cuts because that just makes the economy worse. It’s a simple enough concept – the public sector should take the strain until business begins to recover and then start to cut back.
That is why Labour’s policy is a five point plan for growth and a slower reduction in public spending in order to give the economy time to grow and recover. Not only does that make it easier to repay debt (in the same way it is easier to pay off a credit card bill if your income goes up) but it gives some protection to working people from the hardships of recession.
Cutting back public spending while businesses are still contracting has never worked well. Austerity has never worked. Slashing spending causes recession and leading economists around the world are now queuing up to point out the UK’s collective madness. Worst of all. the hardest hit are working people, the disabled, the vulnerable, the poor – and if that were in any doubt, the coalition government has made sure of it with their policies.
The Chancellor’s excuse that austerity is the only thing that protects the UK’s credit rating and allows us to borrow at low interest is flying out of the window as the credit agencies begin to downgrade the UK.
Before the election, George Osborne promised a new economic model. Perhaps he really believes that the economic cycle and world markets can be changed by the sons of Eton or perhaps having millions of pounds in trust funds makes you less concerned about the effects of sudden and catastrophic readjustment on ordinary working people.
Either way, it is an experiment he is conducting on all of us. Welcome to the lab.