Every motorist knows that if you see a car crash on the road ahead, you must either slowdown or take evasive action to avoid being involved in an accident. Only an idiot would say keep your foot on the accelerator and plough on regardless. The Chancellor of the Exchequer would do well to learn from this motoring analogy because he is driving the British economy towards one almighty economic car crash.
Ever since the Liberal Democrats threw in their lot with the Conservatives to form the coalition government, both parties have insisted that there is no alternative to their austerity measures. It seems the very expensive public schools attended by David Cameron, George Osborne and Nick Clegg failed to teach them anything about economic history. Making deep cuts during a recession just does not work and can even make matters worse. That is precisely what happened in the UK in the 1930s and 1980s when millions of British people were impoverished by this flawed rightwing economic doctrine. Furthermore, the austerity measures in some Eurozone countries provides additional confirmation that massive cuts simply do not work and only result in further economic decline.
But despite of the overwhelming evidence that their economic prospectus didn’t work in the past and isn’t working today, government Mministers still insist that there is no alternative. I remember Margaret Thatcher doing much the same thing in her notorious “no alternative” speech to the 1980 Conservative Party conference. The consequences of her government’s “no alternative” approach saw our manufacturing industry decimated, public services destroyed and unemployment climb to almost 4 million. It was that “no alternative” attitude that also resulted in the deregulation of British banks in 1986. The toxic combination of de-industrialisation and banking deregulation saw finance and banking become the principal engine of economic growth and sowed the seeds of today’s economic woes.
But when Mrs Thatcher imposed massive cuts and downgraded British manufacturing, she was at least able to create an alternative motor for economic growth by deregulating the financial services sector. The Tory-led coalition has no such alternative at their disposal today and their belated damascene conversion to manufacturing would be more credible if their deeds matched their rhetoric. The abolition of Regional Development Agencies, which supported manufacturing companies, and the government’s decision to overlook Britain’s last train maker to build the Thameslink trains in Germany is undermining British industry.
Further proof that the government’s economic policies are going in the wrong direction came earlier this week when the International Monetary Fund once again slashed its UK growth forecasts. The IMF also said Britain should delay plans to cut spending and raise taxes if growth continues to weaken. Then on Wednesday, figures were released showing government borrowing in August reached a record high for the month.
The truth is since this Tory-led coalition came to power we have seen economic growth faltering, public services deteriorating, inflation increasing, unemployment rising, government borrowing escalating and living standards falling. But in spite of the weight of historical and contemporary evidence that cutting too far and too fast makes things worse, government ministers continue to spout the “no alternative” mantra.
Once upon a time, the Chancellor told us he would cut borrowing, reduce unemployment and grow the economy. But he is failing on every count and unless he changes direction now, the casualties caused by his economic car crash will continue to grow.