So today, the Telegraph (of all papers) carries an article on IMF warnings to relax our austerity programme. They point out that
“The IMF said that the British economy may not be able to cope with the scale of austerity planned for 2013-14.
“The IMF suggested there was little evidence to indicate fiscal easing would provoke a strong adverse reaction from markets”
They then went on to slash growth forecasts for the UK by a bigger margin than any other developed nation, to just 0.2% having predicted 0.8% just three months ago. They have cut growth forecasts for next year from 2% to 1.4%
Now, if you’ve glazed over and all you can read is “Blah blah-blah blah-blah….” here are the important bits.
Firstly, the economy is in a much worse mess than we feared. Everyone expected growth to be returning by now, instead, we are mired in recession and that recession is much deeper and lasting longer than anyone thought even a few months ago. It is almost certainly at least partially, a direct result of austerity policies
Secondly, the Labour and Lib Dem plans for the economy pre-election were right and the Tories have got this spectacularly wrong. Most voters did not vote for an austerity manifesto and I don’t think it is any longer unreasonable to call a vote of no confidence in this government if they fail to relax their plans for the economy immediately. They have no mandate, no ideas and no ability. This is getting serious now. We risk losing a generation of young people to unemployment, a flatlining economy for a decade or more and grinding poverty for those casually crushed by the austerity steam roller.
Finally, the lack of global imagination to solve these credit problems decimating our futures is breathtaking. What do the IMF suggest?
Tax cuts. Yep, give carefully selected groups of society a bit more money back to spend in the economy.
Also, maybe build some stuff.
It seems to have escaped every lofty economic genius that taking with one hand (austerity) yet giving back with the other (tax-cuts) can only ever be a zero sum game. In primary school terms, 2-2 = 0 Add 2 back again and you still end up with 2
“Building some stuff” is much more promising. But we’re talking post war scales of stimulus to have a hope of recovery.
So George, I propose (as do many others) that you announce a National Restoration project. You will borrow lots of cash at historically low interest rates to build houses and bridges and restore national treasures.
You will introduce the biggest apprenticeship scheme in living memory and offer real paid work to those who are unemployed. They will build their own homes, learn a trade or skills along the way, then they can live in the home they worked on themselves at a favourable rent. This way, we can train an army of engineers, builders, electricians, plumbers and architects and give them a secure future. If Government cannot build and then rent affordable housing at a profit, they really might as well give up.
We must build and invent and innovate our way out of this mess with a sense of national spirit and solidarity. We can build opera houses or park pavillions; we can create treasures for the future or rescue those we already have. It doesn’t matter too much what we build, but it matters very much that we start to build something. And soon. The scheme can rehabilitate offenders, train those without skills, or simply give young people a job and some hope. What’s more, we’d be building more than just bricks and mortar. We’d be re-building communities.
A few houses won’t help, one or two high gloss national announcements won’t do the trick, things have gone too far. We need a vast national scheme backed with real commitment and passion.
The IMF warnings are stark and leave little room for doubt.
Now is a time for great women and men. For courage, inspiration and leadership. It is a time for pulling together, not falling apart, we must reach for the stars, not race to the bottom.
I’m not sure that there is anyone left here, or abroad, who believes George Osborne is that man of courage or that this Government can provide the inspiration we need.
Now is no time for British reservation or timidity.
We need to act now. Or it it really will be too late.
This was originally posted here.