Ann Pettifor takes Mr Osborne to task for the latest figures on borrowing that show his austerity plan is working the way he planned.
Ann Pettifor is the co-founder of the think tank PRIME
One has to feel sorry for the chancellor. Many mainstream economists – in both the City and academia – backed him to the hilt: egging on his austerity policies, and boldly forecasting the rate at which the deficit would fall. The governor of the Bank of England caused controversy by endorsing the strategy. Markets greeted the austerity programme with euphoria. And No 10 was castigated for preparing a plan B.
Professor Chick and I were among the few to sound a warning, in our June, 2010 publication: “The economic consequences of Mr. Osborne” we insisted that once the private banking crisis had been transmitted to the real economy, fiscal consolidation would not ‘slash’ the government’s debt, but cause it to rise. Our argument was not based on ideological conviction, but on a century’s worth of macroeconomic evidence.
Today, those who shared our fears have been vindicated – even before the coalition’s deep, job-destroying spending cuts have been fully implemented. The announcement by the Office for National Statistics (ONS) that the deficit had widened dramatically in April by £10 billion -the largest April budget shortfall since monthly records began in 1993 – has been seized upon in shock by the chancellor’s friends in the media and the City. Without any apparent qualms, they have fallen over themselves to deplore the rise, and predict economic gloom.
Mr Osborne ought to choose his friends (and economic advisers) more carefully.
37 Responses to “The consequences of Mr Osborne: More deficit”
Anon E Mouse
FatBloke on Tour – Long time no blog.
Missus in social services – no front line cuts in their office.
Elder daughter still at the NHS dentist – no cuts.
Younger daughter at local council – no cuts (but not recruiting for 18 months).
Sister at the school board – no cuts. Parents retired as you know.
Anyway what happened to the double dip recession you predicted?
Mason Dixon, Autistic
Mouse, despite having it carefully explained to you(and elsewhere on the web it has been carefully explained what is meant by ‘cuts’ and ‘front-loaded’), you still don’t get it. The Spectator does which is why they don’t report it, instead pushing that gibberish.
If there were no cuts, people wouldn’t be losing their jobs; they’d have their pay rises frozen or slowed instead. But they are losing jobs: that is a cut. No amount of fiddling a five-year balance sheet changes that *front-loaded cut*. Services are being cut, spending is rising; there’s no contradiction. It is exactly as predicted that the cuts are being made to areas which are a false economy to cut; the Chancellor has tried to save money by cutting things that add value and save money.
Your claim that tax receipts fell because of ‘recession’ collapses on itself unless what you are saying is that this is a double-dip recession; if that’s the case guess who and what caused that? Most agreed that the recession ended last year as the negative growth ended.
Anon E Mouse
Mason Dixon, Autistic – The government is NOT spending LESS than last year.
It IS spending MORE year on year.
Which part of that are you struggling to understand as you swallow the spin from this government about austerity?
If Labour activists believe everything this government tells them then they will walk it at the next general election…
Charles Wheeler
But Osborne et al MUST know that ‘expansionary austerity’ is a chimera – which suggests that cutting back the public sector and the welfare state is higher up the agenda than cutting the deficit – indeed, were the govt. to reduce the deficit through growth it would undermine their project – which is a ‘small’, neoliberal state. The idea that they simply don’t understand that cutting jobs and wages leads to lower GDP is untenable.
Unfortunately, the idea that corporate and financial interests are poorly served long-term by strangling the golden goose of mass consumption in favour of an economy geared to satisfying a small elite is low on the radar – as Keynes said, in the long-term we are all dead. The top 1% are making as much hay as they can before the next crash. Osborne is simply facilitating that process.
Mason Dixon, Autistic
“Which part of that are you struggling to understand as you swallow the spin from this government about austerity?”
I dnn’t know Mouse, maybe the part where I said: “Services are being cut, spending is rising; there’s no contradiction”
You seem to have missed it. Please explain why Spectator readers don’t understand that spending can rise while services are cut; it’s only a case of making the obvious leap that *spending on services is being and has been cut*.