For a year now, Britain’s economy has been stuck in a vicious cycle of low growth, high unemployment and fiscal austerity. But unlike Greece, which has been forced into induced recession by misguided European Union creditors, Britain has inflicted this harmful quack cure on itself.
Austerity was a deliberate ideological choice by the Tory-Lib Dem coalition government. It has failed and can be expected to keep failing. But neither party is yet prepared to acknowledge that reality and change course.
Britain’s economy has barely grown since the budget cuts began taking effect late last year. The most recent quarterly figures showed the economy flat-lining, with growth at 0.1 percent.
New figures released this week reported Britain’s highest jobless numbers in more than 15 years. Independent analysts expect unemployment — now 8.1 percent — to keep rising in the months ahead. The government has kept its promise to slash public-sector jobs — more than 100,000 have been lost in recent months. But its deficit-reduction policies have failed to revive the business confidence that was supposed to spur private-sector hiring.
Drastic public spending cuts were the wrong deficit-reduction strategy for the weakened British economy a year ago.
A few years of robust growth would go far toward making the swollen deficit more manageable. But slashing government spending in an already stalled economy weakens anaemic demand, leading to lost output and lost tax revenues. As revenues fall, deficit reduction requires longer, deeper spending cuts. Cut too far, too fast, and the result is not a balanced budget but a lost decade of no growth. That could now happen in Britain. With Sefton and the rest of the North West being hardest hit because of our reliance on public sector jobs.
Austerity is a political ideology masquerading as an economic policy. It rests on a myth, impervious to facts, that portrays all government spending as wasteful and harmful, and unnecessary to the recovery. The real world is a lot more complicated. Mr Cameron and Mr Osborne need to change tack and quickly.
We need an economy that is growing, so that more people are in work. The latest unemployment figures are dire and behind the figures are the people out of work and the families who are struggling to make ends meet. The government is set to borrow $46 billion more than it expected , which just goes to show that the speed and scale of the cuts have made matters worse not better. High unemployment means higher benefits bills and less tax being paid. More jobs means lower benefits bills and more tax being paid. That’s how to cut the deficit.
I have secured a debate in parliament on cutting VAT on the refurbishment of empty homes. At present VAT at 20% is charged on top of all home improvements and repair work. New builds don’t have VAT on them. Cutting VAT for repairs and refurbishments would mean that the 6,000 empty homes in Sefton could be brought back into use. This would help with housing for our young people and kick start the building and construction industry, helping the economy and creating jobs for the unemployed. It would also protect green spaces in our towns and villages and stop developers concreting over the countryside.
Sefton needs a plan B. Sefton people need jobs. Let’s have some practical alternatives to the government’s cuts.