Tuesday, 2 July 2013

Confused Labour

Owen Jones, the Dave Spart de nos jours, wrote in the Indy yesterday:

George Osborne’s political career should be lying face down, lifeless, bobbing in the Thames. His statement last week should have been rebranded “The Comprehensive Review of the Failure of Austerity”. The Tories’ central pledge at the last election, after all, was that the deficit would be erased, wiped out, vanished over the course of this Parliament: there should have been no alleged need for further cuts after 2015.

Either deliberately or out of ignorance Jones fails to point out that the coalition abandoned the Conservatives deficit reduction schedule in favour of a less stringent programme in line with the Liberal Democrat manifesto (and with slightly less front-loading than Alistair Darling's Labour plans).  In other words, the government is doing just what the opposition says it should be doing. Of course, the PM and Chancellor cannot admit to this, because it involves increasing debt until the deficit is eliminated. They do not want to give any more ammunition to the "dries" behind them on the Conservative benches.

As to the 2012/13 borrowing, it should be remembered that the 2011/12 figures have been revised downwards, so that the 2012/13 provisionals look particularly bad by comparison.

Another factor which Jones does not mention is the unexpected severity of the attack on the eurozone from 2010 on, which depressed economic activity on the continent, in turn reducing UK exports and thence tax take.

However, there are limits to what governments can achieve. They cannot provide the dynamic to drive the economy. That comes from entrepreneurs and companies.

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