Ahead of the Comprehensive Spending Review tomorrow, and following Alan Johnson’s speech on the economy yesterday, it’s clear that both Labour and the coalition are thinking long-term in their economic strategies. That being the case, you’d hope that the chancellor would be someone who had a track record in quality, long-term economic thinking. An indication of George Osborne’s thoughts on the economy from his early days as shadow chancellor can be found in an article for the Times, in which he praised Ireland’s economic “miracle”:
“A generation ago, the very idea that a British politician would go to Ireland to see how to run an economy would have been laughable. The Irish Republic was seen as Britain’s poor and troubled country cousin, a rural backwater on the edge of Europe. Today things are different. Ireland stands as a shining example of the art of the possible in long-term economic policymaking.”
The Irish government were some of the earliest proponents of the “austerity” economics favoured by Osborne, choosing to tackle the recession through severe cuts and tax rises. Yet Sky News reported just two weeks ago that:
“Gross Domestic Product (GDP) – a key measure of the value of goods and services – is expected to increase by just 0.2% this year, according to the latest quarterly bulletin. That compares with an earlier prediction of 1% growth by the government.”
“A weaker economic backdrop will make it even more difficult for Prime Minister Brian Cowen’s government to tackle the worst budget deficit of any country the European Union, as international concerns about the Republic’s finances mount.”
Osborne’s cuts will weaken the economy further by withdrawing crucial spending from the economy – and perversely make it harder to pay off the deficit. Labour’s alternative plan as outlined by Johnson yesterday places the focus on growth to avoid the Irish scenario being replicated here. Osborne, meanwhile, doesn’t seem to have learned the lesson from across the Irish Sea (now that it disagrees with his ideology).
Keynes is often quoted as having said, “When the facts change, I change my mind. What do you do, sir?”. George Osborne however seems determined to prove that this man is ‘not for turning’.
As we head into a spending review that will see severe, real and immediate cuts, perhaps a better question from the media might be – “What about Ireland George?”