McDonnell is right and Osborne is wrong.

For example, earlier this week the Brecon and Radnor Express – of which This Writer is a former editor – published details of pay levels in the county of Powys since 2008 – showing that average pay has dropped by 10 per cent.

GMB union figures showed earnings had risen by 10.7 per cent but these were completely negated by a 20.6 per cent increase in inflation during the same period, meaning a 9.9 per cent drop in the real value of pay.

So, when John McDonnell writes that poor pay and insecurity means households can’t “live within their means”, we can see the proof of that, right here in Mid Wales.

McDonnell is right about the sale of national assets – look at the number of railway companies, water companies, energy suppliers that are owned by the nationalised industries of foreign countries. The shadow chancellor himself put it best when he said George Osborne does not mind if British industries are nationalised, as long as their owners are foreign.

These are all issues that have been developing for many years, yet strangely they were kept quiet in the run-up to the general election last May. Did Ed Miliband’s Labour make any noises about them? It seems not. Thank goodness the party under Jeremy Corbyn and John McDonnell is finally doing its job.

Let us hope the so-called “Bitterites” in the Labour Party have the sense to accept the failures from when they were in charge, and the correctness of the current approach.

George Osborne yesterday warned us about a “cocktail of threats” brewing in the world economy. All the ingredients are there for a noxious brew. The emerging markets debt bubble. The ongoing stock market turmoil in China. Recession in Brazil and Russia, and the slowdown in India. The collapse in global commodity prices.

I’ve warned about the danger signs elsewhere before. But curiously, Osborne didn’t talk up these “threats” in last year’s autumn statement. He didn’t raise them at the summer budget. They were hardly a centrepiece of his election campaign.

Quite the opposite. He’s spent a fair few years now talking up how clever he has been, and how good everything is going to be. This was a result of his “long-term economic plan”. But there’s never been a “long-term economic plan”. Just the short-term politics of austerity. The result is Osborne serving up a rather unpleasant domestic cocktail of his own making.

The chancellor claims Britain is “living within its means”, but our borrowing from the rest of the world rose to record levels. We have to borrow because we buy far more from the rest of the world than the rest of the world buys from us. And because we’ve borrowed so much money, and sold off so many assets, the payments due to the rest of the world are astronomical. We are borrowing more from abroad than any other developed economy.

Far from “rebalancing” the economy, Britain has become more dependent on services, and we’ve shrunk manufacturing, which is the bedrock of any modern economy. And while employment in London is up nearly 12% since 2010, it’s up just 0.3% across the rest of the country. Even then, far too many new jobs are poorly paid and insecure, with pay still down on 2008.

The increase in poorly paid, insecure jobs means British households can’t “live within their means” either. After years of paying back their debts, households are being forced to borrow once more. Unsecured borrowing, covering credit cards, store cards and (alarmingly) payday lending is now rising at the fastest rate since before the crash.

The centrepiece of Osborne’s much-hyped “plan” is his effort to bring down the government’s own borrowing, while hoping he can increase household debts. And with tremors in China, it’s Britain that, thanks to its overstretched banks, has the largest single exposure to Chinese debt of any major western economy.

Source: George Osborne’s ‘cocktail of threats’ will leave us with a hangover | John McDonnell | Opinion | The Guardian

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