How can the Organisation for Economic Co-operation and Development tell George Osborne that he should invest in infrastructure projects but continue with his policy of cutting public spending, when the first public spending he cut was infrastructure projects?
Is this a sign of the delirium into which the western economies are sinking, partly through slavish adherence to neoliberal nonsense – in the face of all the facts – and party through a lack of raw intelligence?
The OECD, according to The Guardian, has revised down its economic growth forecast for the UK. What a surprise; they haven’t revised our growth upwards since before Osborne became Chancellor – and that alone indicates where the problem lies.
It says spending cuts and a lack of consumer and business confidence are restricting what we should all call “the recovery” only in mocking terms.
But, as the newspaper reports, “it [the OECD] backed George Osborne’s plans for further spending cuts, saying: ‘With a high budget deficit and gross government debt rising to 90 per cent of GDP in 2012, further fiscal consolidation is necessary to restore the sustainability of public finances.'”
What? It’s still supporting the discredited view that when public debt hits 90 per cent of GDP, growth is slowed? Hasn’t that idea been comprehensively rubbished – not only on paper but in the fact that UK growth hit standstill point the instant Osborne came in as Chancellor and inflicted his policies on us all?
It isn’t the amount of debt that’s the problem – its the stupid things that blinkered upper-class idiots do in response!
The OECD said the Labour market was “resilient”, so it obviously has been paying too much attention to DWP press releases when it should have looked up the facts. According to the Resolution Foundation (yes, another thinktank), as reported in The Independent, “The jobs market remains weak and is likely to continue to struggle well into the second half of the decade, making this a more severe downturn for employment levels than the two previous recessions”.
The article states: “The Resolution Foundation has performed an analysis of the total adult employment rate – which reflects the increase in the size of the population and the growth of the available workforce – and found that there remains a “jobs gap” of 930,000. This is the number of new jobs that would be required to restore the employment rate from its present level of 58.5 per cent to the 60.3 per cent recorded in 2008. This jobs gap has actually grown from 830,000 in the final quarter of last year.”
Once again, we see the facts do not support Coalition government press releases.
The OECD’s claim that average real earnings are “weak”, on the other hand, is realistic and gives the necessary perspective to a report from the Office for National Statistics that the total number of weekly hours worked across the economy hit a new record high of 950.3 million in the first quarter of the year.
If everybody’s working so much, why haven’t we got any money? Answer: Because the Tory-led government has been pushing wages downwards, ever since it came into power. Average earnings for bosses of FT350 companies have rocketed upwards, but the worker on the street had a pay rise of just 0.8 per cent last year. Look at the way benefit increases have been pushed below the rate of inflation (the DWP again!) in order to make the unemployed desperate to take whatever work they can get – no matter how poorly-paid – and to put those who have jobs in fear of losing them, so that they won’t be demanding pay rises anytime soon.
Back to the OECD: It wants a house-building programme to spur jobs growth. Without this, it warned that house values could overheat, sparking another price bubble. Isn’t that what George Osborne wants? Look at the so-called “second-home subsidy” he announced in the March budget, when he said the government would underwrite a percentage of new house purchases. Already we have seen warnings (from Sir Mervyn King in this Vox article) that it will create a price bubble.
So not only is Osborne right; he’s also wrong. Growth is down because of his policy of cuts, but he should continue making them. Unemployment is down – but the jobs gap has grown.
Also, not only is Osborne wrong; he’s very wrong. Low wages mean economy-boosting demand is also low – but the government is pushing wages down still further. House-building is needed to spur jobs growth and prevent a price bubble – but he isn’t building houses and he is actively pursuing the creation of a price bubble.
That’s what the OECD report says. There’s no way Osborne should be using it to support his policies but I bet he will.
If I were the secretary of state in one of the government departments he’s trying to squeeze for more cuts, I would be phoning the local mental hospital, saying a dangerous madman was loose in Whitehall and demanding that he should be sectioned.
But it seems that, instead of this, the ministers who’ve dragged their feet will be subjected to a grilling by the all-new ‘Star Chamber’, which is the name for the public expenditure committee Osborne has set up. Apparently ‘Star Chamber’ has a “mystique” about it (according to The Guardian); in fact it will consist of Osborne, Danny Alexander and those ministers who’ve given in and agreed cuts, haranguing the dissenters until they fold up like cheap thugs who’ve been punched in the kidneys once too often.
The fact that they will all eventually capitulate means we can laugh at them next time they’re on television trying to act tough, but the whole sorry story leaves us with one immutable fact:
This is no way to run an economy.