The Tories keep priding themselves that they can pull through the election by focusing on the economy and on political leadership. The latter has now come apart in their hands as Cameron shows himself frit of a head-to-head televised debate with Miliband. But equally on the economy also the latest data are disastrous for the Tories. Getting down the deficit, which has become the fulcrum of government economic policy purporting to justify the austerity of the last 5 years and intended to justify the even deeper austerity of the next 5 years if the Tories win, has now come to a dead stop. Very few people realise that this totem of government policy, reducing the deficit, slowed down dramatically when Osborne took over with his endless cuts, and has proceeded ever since at a glacial pace.
In this current fiscal year the deficit is still at the enormous level of nearly £100bn and has stopped falling altogether because the decline in household incomes (still on average 8% in real terms below their level in 2009) has cut government tax receipts and therefore pushed up the deficit. So what’s the point of continuing with ever deeper austerity, which has wreaked havoc with the lives of up to a third of the population, if it isn’t even cutting the deficit which it was designed to do? Why isn’t Labour saying this loud and clear as the reason why we should now abandon austerity?
But that isn’t all about this disastrous Tory economic policy. Most people also don’t realise the significance of the latest UK current account deficit which has now reached 6% of GDP, the highest it has ever been for the last 60 years – and it is still increasing. What this means is that the UK under current Tory policies is now importing £90bn a year more than it is exporting – a process that cannot continue indefinitely without eventually a huge collapse in the value of the pound plus the imposition of capital controls to prevent a runaway sell-off of what will have become valueless pounds.
It is worth unpicking this further. This deficit on our account with the rest of the world is made up of two main items. One is the deficit on UK trade in manufactured goods which, partly because of an over-valued currency (to please the City of London) and partly because of the precipitate decline in manufacturing industry engineered by Thatcher, has now this year reached the unprecedented level of over £110bn. The other main item is the UK record deficit in its investment income balance which has now reached £40bn a year. What this means is that Tory marketisation policies (let the market rip) has sold off phenomenal quantities of British assets on the international market, on a scale that no other country has done. In the last 10 years alone the private sell-off of British companies has cumulatively reached the staggering level of £440bn. This is a disastrous policy of long-term failure: why isn’t Labour trumpeting this for all its worth?
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Labour would have to admit, that we wouldn’t have got it down either?