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Cut better than the Tories? That’s not good enough, Labour!

Cameron and Osborne You must give credit to Osborne – he’s a real street-wise barrow boy who knows how to concoct a story and then hammer it home with such chutzpah and if necessary aggression that his line becomes the accepted fact, when even a moment’s thought exposes it as nonsense. The line he’s put across is that the deficit is coming down nicely, indeed he’s cut it by a third since the election, and things are now going so well he will be able to eliminate the whole budget deficit (alias public sector net borrowing) by 2018-19.

So match that, Labour! Instead of Labour countering by saying it can do just as well, if not better, in this cuts race, it would be better to demonstrate what an utter fantasy this Osborne illusion is. The figures demonstrate that clearly. In 2004-5 the deficit on the public accounts was 3.5% of GDP, below average for the OECD. Over the next 2 years it was reduced still further to 2.5% in 2006-7, just before the crash. In the next year, with the first signs of financial failure beginning to appear, it rose marginally to 2.6%. i.e. £38bn. In the next year, 2008-9, the year of the Lehman Bros collapse as well as other banks, it shot up to 6.9% (£99bn) and then in 2009-10 to 11% (£157bn). It then started to come down: but why?

Alastair Darling, in his pivotal 2009 budget followed by a second March 2010 budget, had wisely eased monetary conditions, particularly by lowering interest rates dramatically, and applied a significant fiscal stimulus to the ailing economy in the face of the bankers’ bailout and the recession it triggered. These measures take a year or so to have effect, and by 2011 the deficit was down sharply to 7.6% (£118bn). However, in his first budget in June 2010 Osborne threw the gear lever sharply into reverse and brought the expansionary stimulus to a rapid halt. Within a year the reduction in the deficit – ostensibly the aim of the whole exercise – had dwindled almost to nothing: it was £115bn in 2012 and then £11bn in 2013. Lie no.1 was Osborne declaring, as he has repeated regularly since, that he had already cut the deficit by a third. The truth is it hasn’t even now been reduced by a third, but far more importantly virtually all the reduction that has occurred has been due to Darling, not to Osborne.

Against that background how do we now judge Osborne’s boast that he will totally eliminate the deficit by 2018-9? He reduced the deficit in the last 2 years by a minuscule £7bn, but now claims that within the next 5 years he will eliminate the entire remaining £111bn! Pull the other one. The man is in a state of denial – it’s just one delusion after another. In his first budget he promised to clear the deficit by the election in 2015. He will almost certainly by then be some £100bn wide of that mark. Having made a fool of himself with his initial predictions – Osborne doesn’t do humility – he’s now compounding his absurdities with his fantastical pretence that he’ll get the public accounts within 4-5 years from now! If this man was in business, he would go down for a long sentence for the grossest mis-selling of financial products in modern times. The man is toast, a laughing stock out of his own mouth. When will Labour hit this target?

One Comment

  1. terry sullivan says:

    add in pfi, pensions liabilities notwork rail and figures change

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