Et tu, Brute? We have now reached a point where it seems impossible to present a plausible rationale for continuing with the government’s economic strategy (for want of a worse word). Osborne, a nasty piece of work even at the best of times, is now being assailed by all those global or national financial authorities who’ve previously supported him. Even the IMF has officially told him: “Recovery has stalled. Post-crisis repair and rebalancing of the UK economy is likely to be more prolonged than initially envisaged. Confidence is weak and uncertainty is high”.
The latest GDP figures will show the UK economy flatlining now for 2 years and still in recession for the 3 months to June. Manufacturing and construction have contracted and services have failed to grow. Bank lending to industry is now at the worst trend since 2009, with a £3bn fall hitting SMEs hardest. Britain is now the only country in the G20, apart from Italy, which is in double-dip recession. Apart from that, everything’s fine.
Not for some. Not for those at the wrong end of the austerity stick. Cameron announced last week that austerity is now expected to last till 2020. Considering we were originally told the agony would all be over and a new pristine dynamic economy in place by 2015, then it was put back by Osborne to 2017 at the earliest, I wouldn’t bet on 2020 – nor I suspect do most members of the government.
Not all right either for struggling businesses, as the howl of pain erupting from the president of the British Chambers of Commerce showed all too clearly last week. Not for anybody really. If Spain and Italy go belly up, thanks to Merkel, not only will UK trade, already at unsustainably high deficit levels (£99bn deficit in traed goods in 2010), drop by a further estimated disastrous 7%, but the UK banks too stand to lose around £95bn.
So why is this madness still continuing? When the IMF, not normally a trendy lefty organisation, says the UK government must kickstart the economy with a boost to spending and increased investment in order to avoid a long depression and a “permanent loss of productive capacity”, even this bunch of far-right Tory ideologues should take notice and discover they have a reverse gear.
So why not? Saving Osborne’s face? Never under-estimate politicians’ vanity, but no Cabinet will hang on to a loser. But caught between the markets still demanding death-defying cuts and the IMF now on the side of growth, Osborne can still Houdini-like find a way through. With no increase in public borrowing, launch a big jobs and growth programme, funded by taxing the near-half trillion pounds amassed by the top 1% in the last 3 years. Now I didn’t say that, did I?