Thursday, 26 January 2012
Who'll lift the gloom
There was no snow to blame this time so it must be the eurozone's fault for the 0.2% contraction in the UK economy.
“It’s not me guv.” was David Cameron’s response to our shrinking economy. With our economy going backwards, yesterday, both our Prime Minister and Chancellor chose to blame the euro crisis for the rotten state of our economy.
But, the fact of the matter is, that the economy has been flatlining since 2010 a point that Ed Miliband was quick to jump on in yesterday’s exchanges in the House of Commons.
Even Sir Mervyn King is predicting that the road out of recession is going to be “arduous, long and uneven.”
The austerity road that the government was determined to travel on is in large measure the cause of the country’s economic malaise.
Despite the International Monetary Fund urging the government to ease up on the cuts agenda, the government has persisted with it, even when all the evidence points to it making matters worse.
In such circumstances you’d think that Labour would be shooting at an open goal. Indeed Ed Ball’s predictions have come true. He’s been warning for a while that the government’s policy would result in bringing about that double dip recession.
Yesterday’s figures surely point to that state of affairs being just round the corner and there's plenty of anecdotal evidence that we’re already there.
But the opinion polls show that Labour are not making an impact. Voters still believe the rhetoric of the Chancellor that we’d be just like Greece if we hadn’t gone down the road of severe cuts.
It is certainly true that the credit agencies have been sympathetic to the Osborne view of the world. The policy the Chancellor sold was that cutting the public sector was the way forward.
But, and it’s a very important but, these agencies swallowed the Chancellor’s line that parallel to the severe cuts in the public sector, the private sector would see real growth.
This has not happened. An austerity policy without robust growth results in higher deficits. So yesterday Britain’s national debt hit a massive £1trillion. This alongside unemployment of over two and a half million.
My prediction is that credit agencies will reflect this. You don’t need to be Mystic Meg to see Britain following France and loosing its triple A rating.
Whether the Opposition are able to capitalise on these developments is highly unlikely.
Miliband’s leadership has been inept in many areas not least in their approach to the economy.
Last week was a prime example of them shooting themselves in the foot. They confused the voter by talking about what they would or wouldn’t do after the election.
Their new line is that they will stick with the present governments cuts. For months they have been attacking the very same government for cutting too fast and urging them to grow the economy. It seems that they're been advised by Confused.com
A party that doesn’t offer hope, and persists with the same solutions as the existing government, will not win support. The voters will stick with the devil they know.
Miliband will have to shape up and soon or it won’t be just Plaid Cymru that will be holding a leadership election this year.