Wednesday, 28 September 2011

Coalition need to rethink approach to economy

My latest article in the Cornish Guardian looks at the growing problems in the UK economy. It was as follows:

Headline after headline in recent weeks has painted a gloomy picture of the economic problems facing the United Kingdom, casting significant doubt on the wisdom of the British Government’s austerity drive.

I believe it was the economist John Maynard Keynes who said that “When the facts change, I change my mind".

Isn’t it time that David Cameron and George Osborne took his advice, admitted that circumstances are changing, looked again at the scope and depth of the cuts they are implementing, and found a new and different way forward?

The Coalition continues to make the argument that severe cuts to public spending will not damage the economy, and that job losses in the public sector will be more than compensated for by growth in the private sector.

But figures show that this assertion is false. The latest figures, for the three months leading up to June, show that 111,000 jobs were lost in the public sector during this period but that the private sector created only 41,000 new jobs across the UK.

Over a similar three-month period, unemployment figures show that 80,000 people joined the dole queue – taking the number of people out of work to above 2.5 million. This is a two-year high.

I consider that the Government’s approach is both wrong and counter-productive. It’s drastic spending cuts have reduced growth, as tax receipts from working people have fallen and welfare costs have increased. This makes no sense at all!

What is more, the International Monetary Fund has acknowledged that the UK’s economic performance is much weaker than anticipated, and has cut its growth forecasts for the UK economy.

It has advised the Coalition to consider slowing the pace of deficit reduction and, along with a number of economists, has stated that there is a strong possibility that the UK could fall back into recession – signalling the much feared double-dip recession.

As the cuts start to bite and people worry about the provision of public services in their local areas, it is not surprising that there is also increasing public dissatisfaction with the actions of the Government.

Recent polls are clearly showing that people think that the Government is cutting public expenditure unfairly, and that the cuts are both too fast and too deep.

Taking into account all the economic indicators being reported at the present, surely now is the time for the Government to think again and to reduce its programme of cuts, thereby safeguarding jobs and boosting economic activity?

I must admit the idea for using the Keynes quote came from an old Guardian article by Polly Toynbee. Thanks Polly.

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