Monday, August 30, 2010

"Crisis, what crisis?"... CONDEM porkies about National Debt

 You would think from recent announcements by Osborne (and whatever Libdem spokesperson) that we are indeed about to go cap in hand to the IMF at any moment. 

This BBC graph based on IMF figures reported upon yesterday on Labour list by Howard Dawber makes you think "wot?".

Just look at the current and projected debt levels?


The ConDems have based their whole economic policy on the idea that the economy is tanking, that there is no spare money in government, but that growth is strong enough to cope with a massive reduction in public spending. In their analysis Britain’s deficit and debt puts us on a par with Greece and if we don’t take drastic action the whole economy will collapse. Labour’s plan to halve the deficit in 4 years, generally regarded as ambitious but workable by economists, is too slow. They want to halve it in two years.

Why is it a bad idea? The ConDems have their facts wrong, and on top of that have the wrong strategy as well. Despite being faced with the worst world-wide recession in decades, Labour took brave decisions to support the banks, stimulate the economy and keep spending under control. As a result, unemployment when Labour left office in 2010 was lower than when Labour came to power in 1997. Interest rates remain the lowest they have been for decades. Having got the economy out of recession at the end of last year, growth is now higher than expected – the economy grew by 1.1% from April – June. Unemployment fell in the last quarter and is lower in the UK than the EU average. Our banks have been stable and secure.

And what about our terrible, terrible debt – the reason the Tories keep talking about the “unavoidable” cuts? UK debt as a percentage of GDP reached 68.7% earlier this year and is still rising. That’s not great. But it is comfortably lower than the other G7 countries like Germany, the United States, France, Canada, Italy or Japan. Last time the Tories were in power they put up our debt from 34% of GDP to 51% to help get through the recession of the 1990s. This time they are doing the exact opposite to what most countries around the world agree is the right way to get back into sustainable growth. For a comparison with our major international competitors see this graph. The “savage” cuts programme is not just wrong because it is not based on a real understanding of the economic position of the country, it is wrong because it may reverse the positive trend of growth.

The Bank of England says that the ConDem plans will lead to a slower recovery and higher inflation than previously expected with Labour’s plans.

Finally we taxpayers are already £5bn in profit on the government’s investment in Lloyds and Royal Bank of Scotland. Within a year of the end of the recession Gordon Brown and Alistair Darling’s decision to step in with funding has been proved not just right but very profitable too. The Tories, incidentally, want to sell these shares off at a loss to benefit their friends in the stockbroking and hedge fund industry".

1 comment:

Anonymous said...

just look at ireland massive cuts still credit downgraded
explain that