In the run up to the 2010 General Election, Alistair Darling warned that making cuts deeper and faster than he was planning would put the UK’s economic recovery at risk. At the same time, George Osborne was criticising Labour for the credit ratings agencies giving the UK’s credit rating a negative outlook. He also maintained that cuts could be made much deeper, and much faster than Labour were planning.
It was Labour economic policy that delivered a recovering economy in the first two quarters of 2010. Growth was a modest 0.6 and 0.7% respectively, but decent all the same following the recession brought on by the unchecked recklessness of the banks. It could also be argued that the 3rd quarter of 2010 was the final legacy of Alistair Darling’s policy making – 0.6% growth. But, since Osborne’s austerity has taken hold, we’ve had contraction in 6 of the following 9 quarters, with the UK’s economy officially entering a “double-dip” recession. The cumulative effect of Osborne’s disastrous economic policy has been a paltry 0.4% growth over 2 years. Osborne and his Lid Dem partners in crime tell us that the answer is further damaging cuts. But they’ve sucked all the demand out of the economy. It’s fairly simple that if you cut the incomes of those contributing most to the economy, then growth will suffer. Austerity is self-defeating. Demand is sucked out of the economy, so the answer would be do something to stimulate that demand. The answer from the Tories? More cuts, further hitting demand.
Several economists as well as a number of economic organisations have criticised the austerity being delivered by the Tories. People being hit by them – people who didn’t actually cause the economic crash – have criticised it. But George Osborne is completely immune to any advice that is contrary to his economic lunacy. But the Madness of Chancellor George has finally be laid bare.
Back in 2010 when the UK’s credit rating was given a negative outlook, Osborne was quick to jump on it. The UK had enjoyed a AAA rating since 1978 – under Jim Callaghan’s Labour government. Not even the excesses of Thatcher’s regime could dent that. Osborne told us that the UK’s rising debt was the serious threat to our AAA rating. A commitment was made to cut the UK’s national debt. But, since then, the debt has gone an increased. The reason is fairly simple. Osborne’s savage cuts have killed off any hope of tax revenue being grown. So, as the costs of the cuts increase – people are actually losing their jobs, contrary to what is being reported (taking people off of unemployment statistics when they are moved on the heinous workfare isn’t reducing unemployment) – its simple arithmetic to work out increasing expenditure and falling tax revenue will increase borrowing.
That lack of growth has finally led to Moody’s downgrading the UK’s credit rating from AAA to AA1. Based on Osborne’s comments in 2010 that maintaining AAA was the be-all-and-end all, this is a clear and massive failure on his part. His economic policy has led us to disaster. Incredibly he maintains it’s the UK’s debt that is the problem, but the reality is that it’s the complete lack of growth that has brought us to this point. Moody’s say there is little hope of seeing any recovery until 2016 at the earliest. Osborne says he plans more cuts. When it is obvious that it has been this lunacy that has resulted in the negligible growth that is giving way to rising debt, this course of action is nothing short of economic madness. Cameron shows no real leadership and will back his old school chum. But, if this is allowed to go on, it will end in a massive mess. Osborne has failed, and must resign. But the Tories have failed. The policies the Tories said would let our economy flourish have led to recession, misery and now the loss of Osborne’s cherished AAA rating. It’s what they expected to be judged on. They’ve now been judged, and have been found sorely wanting. We’ll see you at the ballot box and give you our judgment. Don’t expect mercy.