The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now

More gloom on the economy today: The IMF have downgraded UK growth by 0.6 per cent to 1.1 per cent in 2011, and from 2.3 per cent to 1.6 per cent for 2012.

It is almost as if Vince Cable was preparing his fellow sandal-wearing companions for the bleak news from the IMF today when saying there was a risk of a downward spiral due to low demand at his party’s conference. Unfortunately, however, anyone hoping the Lib Dems will see sense that the cuts are too far, too fast will be left sorely disappointed.

Despite growth being downgraded 0.6 per cent by the IMF to 1.1 per cent in 2011, and from 2.3 per cent to 1.6 per cent for 2012, rest assured there will be “no deviation on deficit reduction” for the smaller coalition partner.

Instead, the Tory-led government will be relying on the automatic stabilisers in our economy. In other words, with economic policy failing there is still the safeguard that people losing their jobs will receive unemployment benefits they can spend on goods and services to boost the economy – how reassuring.

The Conservatives resurfaced after 13 years in opposition mainly because of their argument that public spending needs to be drastically and relentlessly cut in order to avoid any further economic malaise.

It is therefore perhaps unsurprising Osborne is now practically begging the Bank of England to begin printing money instead of stepping in as a responsible chancellor and actively promoting growth and jobs.

Contrary to Osborne’s dribble of a Plan B forcing us into a Greek-like catastrophe, the Lib Dems should begin facing the truth instead of repeating the same old lines and refusing to admit the obvious.

First of all, the UK economy is much bigger, stronger and more resistant than that of Greece and is therefore in a much better position to repay its debts.

Secondly, we are not part of a monetary union and therefore have the benefits of a depreciating currency and low interest rates in times of need. For example, despite the problems in the EU’s periphery economies, the ECB decided twice since April this year that it had to increase interest rates because of the overall inflation rate throughout the Union. In the UK, interest rates have been kept at 0.5 per cent for 30 months.

Thirdly, the reason for the bond prices in the UK being at its lowest point since the Second World War is not because it is perceived as a safe haven. Rather, it is simply due to the growth prospects in this country being so low that investors are speculating that low interest rates will have to be maintained for longer than previously expected.

Lastly, the average bond maturity (when the Government needs to repay its debt) is exceptionally longer in the UK, standing at about 14 years, than any other country in the EU. This means the country’s funding will only have a gradual effect on the costs of servicing UK debt and markedly reduces the amount of bonds being sold to investors in any given year.

Christine Largarde, director of the IMF, stated previously that the Government needs to think again about its deficit reduction plan:

“…if it looks like the economy is headed for a prolonged period of weak growth and high unemployment.”

Echoing her calls, in the midst of dire unemployment figures and the continuous downgrading of growth, the Tory-led Government needs to come up with a plan that involves less cuts and more growth – in other words, a Plan B.

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.

19 Responses to “The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now”

  1. John Edginton

    The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now: http://t.co/NZIKcLAP writes @MPittParliament

  2. Political Planet

    The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now: More gloom on the economy … http://t.co/2gxkYp0f

  3. Joseph Burnett

    The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now: http://t.co/NZIKcLAP writes @MPittParliament

  4. John Ainsworth

    The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now: http://t.co/NZIKcLAP writes @MPittParliament

  5. Michael

    The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now l Left Foot Forward – http://j.mp/ocg3jc

  6. Sam hussain

    The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now l Left Foot Forward – http://j.mp/ocg3jc

  7. Watching You

    The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now l Left Foot Forward – http://j.mp/ocg3jc

  8. Without growth will we even halve the deficit? | Left Foot Forward

    […] IMF downgrades to UK growth today is awful news for those who are hoping to cut the […]

  9. Dave Citizen

    I wonder if some of those earning interest on the various debts are getting involved in this. Let’s face it, when the interest rates are put up some people stand to make a fortune, provided the relevant population can be convinced they must do whatever it takes to keep paying.

    I think at the very least the details of all those holding debts (including those under cover of ‘companies’) should be published openly so the people being asked to cough up ever more money can decide if it’s the right thing to do or not.

  10. Alex Braithwaite

    RT @leftfootfwd: The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now http://t.co/HdIhAxVi

  11. Leon Wolfson

    The “automatic stabilisers” like HB, which is being slashed such that people will end up having to move, repeatedly, to absolutely-cheaper (poorer or in poorer areas) every time?

    Not to mention the plans for “Universal” benefit, which look like they will slash what many receive…

    Screw a plan B, we need to be on plan O or P, emergency measures…

  12. Robert

    Plan B, interesting what is plan B for all the rich and the politicians to sell up and leave the country.

  13. Mr. Sensible

    Well this one isn’t working is it…

  14. Awake!

    well the analysis is indeed rough, forgivable in light of events globally. So we stand at the abyss, and so do many others (flippin globalisation… ) and we’ve never been here before, all tied together, and bankrupt. So how much should we borrow? and spend it on what?

  15. Robert

    Plan B is so secret for a reason there is not one.

  16. matthew pitt

    RT @leftfootfwd: The Lib Dems shouldn’t listen to Osborne’s dribble, they should switch to Plan B now http://t.co/cVGaa6S3

  17. Awake!

    or do we man up and accept that there will be good news and bad news. I have been chatting with older people, they remember a country that was much less scared yet also so much less affluent. We keep getting told how bad the cuts are, but we still enjoy one of the highest standrads of living in the world. +1% or-1% isn’t the point here, it’s aversion of a catastrophic scenarion and 30’s all over. This one is different- the numbers are insane and we’re all lashed together thanks to globalisation.

  18. Nigelwootton421

    Tax-dodger Osborne’s “deficit reduction plan” is nothing of the sort. He has jacked up the National Debt by £200 billion, and jacked up unemployment by over 700,000 in order to recklessly bankrupt the UK economy for fat-cat rich pickings on slave labour schemes, workfare, and reduced wages and working conditions. The Tory welfare cuts mean that in this situation, depressed consumer demand cannot sustain economic growth. The UK debt will soar well above it’s current £1 Trillion mark, and that coupled with ever rising unemployment will mean that Britain will in the future will face massive debt repayments that she cannot sustain. The Liberal Democrats need to take advice from the IMF chief Christine Lagarde, and think again about Gideon’s falsehood of a “deficit reduction plan.” Weak growth, rising unemployment and mounting debts must be avoided. The Liberal Democrats must focus on jobs and growth, and stop defending their marriage of convenience with the Tories.

Leave a Reply