Tuesday, 21 August 2012

The Coalition needs to rethink its cuts agenda

My article in this week’s Cornish Guardian will focus on the struggling economy, and the failure of the Coalition’ aggressive austerity package. It is as follows:

In 2010, just prior to the General Election, twenty prominent economists signed a letter to the Sunday Times. In it, they supported George Osborne’s proposed approach to dealing with the economic problems facing this country. He, in turn, hailed it as a "really significant moment in the economic debate."

But the limited recovery of 2010 has stalled and it has been forecast that the Coalition will be borrowing £150 billion more than anticipated.

Last week, the New Statesman magazine contacted all twenty of the “experts” who signed the Sunday Times letter. They were asked them if they still supported the cuts of the Coalition.

Nine of the economists distanced themselves from Osborne’s actions, saying it was time for a rethink. One remained resolute behind the Chancellor, while the remaining ten refused to comment or, rather conveniently, found themselves on holiday.

There is certainly a growing view that the Government’s austerity programme and savage cuts are doing increasing damage to the economy – which has led to the first double-dip recession in generations.

Other economists are joining the debate. Joseph Stiglitz has challenged the Government to “call off the mad austerity” adding “no large economy has ever recovered from a downturn as a result of austerity.” He called on central government to do more to protect the needy, who are suffering the most as a consequence of the recession. He is also rightly demanding progressive taxation with the rich actually paying their fair share for once.

Robert Skidelsky has meanwhile written that “cutting expenditure when there is no other source of growth in the economy is a sure-fire strategy for recession.”

But is Mr Osborne listening? And will he acknowledge that this is also a "really significant moment in the economic debate"?

Here in Cornwall we desperately need the Chancellor to change direction. Recent figures show that Cornwall’s economic performance (GDP) is falling. It is now less than 72% of the EU average and it is declining faster than most other parts of the UK.

The scale of the cuts is immense. Take Cornwall Council as an example. It’s four-year budget has been slashed by over £490 million and councillors are forever being warned about a “graph of doom,” that suggests that further cuts would leave the unitary authority unable to be fund the most basic services.

That cannot be allowed to happen. Mr Osborne and the Coalition must rethink its whole approach to the economy and the funding of our vital public services

No comments: