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In the UK as in Greece do you stay with failed policies or change course?

Miliband Hope imageAlmost everyone, and that includes the IMF and the ECB, now admit that austerity has gone far too far and is now holding back growth. The only exception are the Germans, but even they are now losing ground. They were forced to concede the eurozone bailouts which they never agreed with, they were compelled to accept the foundations being laid for a eurozone banking union, and they lost out in the struggle to stymy Draghi’s ECB offer of €1 trillion of quantitative easing to kick-start the eurozone out of deflation. And following the Syriza victory in Greece the rigid German position – the primacy of cuts, sound budgets, lower borrowing, and structural reforms – is bringing to the surface serious splits within the eurozone with France, Italy and Spain quietly giving support to Tsipras, even if unwilling to pick a public fight with Merkel.

Greece is of course in a far more parlous position than the UK, but there is one factor that links them. Greece has regularly been funded with a bailout to ensure it can survive to pay off its enormous debts, but only on terms that prevent the Greek economy’s capacity to earn the growth to pay off those rising debts. In the UK the government’s austerity policies have squeezed public expenditure and contracted the economy to such a degree that the capacity to pay off the deficit has been halted by the impact of falling incomes. In both cases the policies followed hitherto have been shown to be counter-productive and self-defeating.

Yet in the UK the Tories have made clear they’re going to intensify these policies if they win the election. Their intention is that by 2020 public spending on services, administration and grants, which was 21.2% of G DP in 2009-10, will fall to 12.6%. Put another way, spending per head is aimed to go down from £5,650 to £3,880. Even more alarming, two-fifths of that has taken place up to 2015, but three-fifths are due to be implemented over the next 5 years. With the NHS and schools supposedly protected in nominal terms (though not in terms of real output), it means a real terms decline of more than half for policing, local government, culture, and everything else besides – and most of it still to come.

Is that what a majority of people want? Increasingly the polls are showing that most people are desperate to exit from austerity and to have the opportunity to vote for the alternative (as in Greece) of public investment, jobs and growth. If Ed Miliband offered a commanding narrative of Labour policy of which dumping austerity was the central tenet, it would be the electoral game-changer which voters are crying out for.


  1. Robert says:

    The problem is when your in a battle as labour are now your not going to say much to annoy anyone, we all know the work-shy and welfare scroungers you know those without legs for fighting wars and those who have retired are now on Labour black list while those that work are so high up and beloved.

    It really is hard to find a reason to vote labour once you have dumped those early years of voting labour because your parents and grand parents did these days people vote for a party that has an offer for them.

    I cannot imagine those who joined labour and ran the country in 1945 being in a labour party today and I think many people feel the same.

    We need to either get labour back on track or we need to look somewhere else.

    Me I’m voting for anyone who see me as a person, but sadly these days this is a labour party which is now right wingers and Progress who still pray Blair will be back one day.

    The Tories are the nasty party so we have to vote labour, well nope we do not.

  2. swatantra says:

    I guess if you have a long term economic plan you stick with it.
    Only Oborne’s Plan was actually Balls’s Plan ie to cut the Deficit by half in one Parliament. But to switch horses in midstream is actually quite foolish. I’m a great believer in Economic Cycles, and that these are as natural as Natures Cycles ie Boom follows Bust follows Boom, and that Govt’s can actually do little to change these fundamental events. So, Chancellors are pretty redundant in my opinion, because they do little to alter the state of things I believe Markets achieve an Equilibrium no matter which Govt is in power, and that equilibrium has a built in correction mechanism of its own. So this unexpected turn in Britain’s fortunes had very little to do with Osborne, or Ball, but was achieved by Natural Economics adjusting itself.

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