Poll has revealed Rishi Sunak's worst failures

The Tory mistakes that have cost you dearly

The excellent Simon Wren-Lewis, over at Mainly Macro, is discussing the Tory mistakes that have cost you dearly. Let’s have a look…

He reckons that:

  • Austerity cut the UK economy back by a whopping 15.9 per cent – just in the period from May 2010 to April 2018.
  • Brexit has cut the UK economy by three per cent. That’s lower than the estimate by the Office for Budget Responsibility, but forecasts a higher impact by 2035 than the OBR has suggested.
  • The Covid-19 pandemic had a hard impact because Boris Johnson’s government delayed lockdowns, and it is important to note that his reason for this was entirely false: he said he was trying to protect the economy but in fact he was doing the opposite. The failure to properly fund the NHS to reduce waiting lists afterwards had a further impact, keeping a significant proportion of the labour force out of work due to poor health. Still, Prof Wren-Lewis only suggests a 0.5 per cent impact.

But he doesn’t give a cumulative total. Instead, we get a table showing the impact of these events, year by year.

The greatest harm was inflicted in 2020, with a 7.4 per cent hit to GDP. This year, Prof Wren-Lewis reckons the impact was only five per cent.

Households are now five per cent poorer than in 2010 as a result of government decisions, he calculates – losing £4,000 worth of resources this year. The accumulated total since 2010 comes to a massive £35,000 loss.

The verdict is damning [boldings mine] :

A UK government that enacts policies that reduce GDP by around 2% during its time in office is pretty unusual. To reduce it by 5% is extraordinary, but then since WWII we haven’t had a government that has cut public spending in a recession when interest rates were stuck near zero, or one that deliberately raised trade barriers with our largest market.

The way these numbers are constructed it looks like the consequences of three bad mistakes, but I think it goes deeper than that. What connects them all is crass economic incompetence. In each case expertise was ignored because it didn’t fit in with ideological or political objectives. As I have sometimes said, mistakes made by politicians because they have followed the expert consensus are understandable and to some extent forgivable, but mistakes made because politicians ignore the expert consensus have to be owned by those politicians.

This propensity of Conservative governments to ignore the economic consensus and as a result make very costly mistakes is not unique to this period… What is really alarming is the failure to learn from these mistakes, or even recognise them as mistakes. This isn’t just the natural reluctance of politicians to admit error, but goes far deeper. The Conservatives have created through the right wing press, pressure on the BBC, think tanks and rich donors an alternative reality for themselves, where disasters are seen as triumphs never to be questioned. Which is why in this election they are plugging tax cuts despite crippled public services, refusing to recognise the costs of Brexit and where even the delayed pandemic lockdowns are seen as a mistake.

As a result, as things stand any future Conservative government will be likely to continue to make serious economic policy errors that cost most UK households a substantial amount in lost income and resources.

So much for the Tories, then. They are electoral toast, and they probably know it.

But what about the Labour Party that has re-modelled itself in the Tories’ image and is likely to continue many – if not all – of the failed Tory policies?

We know Keir Starmer won’t reverse austerity.

We know he won’t reverse Brexit.

But people have been persuaded that he and his party are the only choice to replace the Conservatives they emulate. I would say I’m looking forward to Prof Wren-Lewis’s analysis of Labour’s plans, but I doubt he will write one.

We may well rid ourselves of one misguided government on July 4. But do we really have to replace it with more of the same?

Source: mainly macro: The macroeconomic cost of Conservative government

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