The coalition has choked recovery
By The Bristol Post | Friday, November 16, 2012, 09:00
IN his aptly titled column ("Political noise which has little effect on people's lives", The Post, October 31), Conservative MP Jacob Rees-Mogg says that "the recent unemployment figures were good", "the deficit contracted in September" and "real disposable income has surged".
This reminds me of David Cameron, back in October 2010, also clutching at straws, when he told us we were "out of the danger zone" on the basis of one quarter's growth figures. Then, as now, any GCSE economics student would know not to be so daft as to pretend that you can judge the state of the economy merely on the basis of the latest set of figures.
And, of course, what followed the government's "out of danger" prediction two years ago has been the worst double-dip recession in 50 years, higher unemployment and falling living standards.
Clearly, neither economics nor history is the MP for North-East Somerset's strong point. Let me take his straws one at a time.
Mr Rees-Mogg thinks that the recent unemployment figures are "good". Millions of people would beg to differ. In reality, unemployment is at levels not seen since John Major and Norman Lamont (assisted by David Cameron) were in power in the early 1990s. Millions more are forced to work part-time. And, shockingly, a million young people are out of work.
More than 600 public sector jobs are being lost every day and these have not been offset by increased jobs in the private sector – which is why most serious commentators, including the CBI, believe that unemployment will rise next year, as a result of further public spending cuts and lack of growth.
Then we are told that the "deficit contracted in September". It did. But if we look at the bigger picture, and tell the full story, we see that government borrowing so far this year is £2.7bn higher than for the same period last year. With the economy flatlining, after two years of coalition government, public sector debt is rising, not falling, as a proportion of GDP. Finally, real disposable income has not "surged" under this government – it has fallen, as people in the real world know. And on present policies, this will continue – see, for example, the recent report of the Commission on Living Standards, chaired by a business leader and made up of a diverse group of economists, industrialists, trade unionists and bankers.
We are in a depression caused principally by the global collapse of the financial sector, resulting from the lack of regulation promoted so vigorously by Mrs Thatcher and her followers. But what has kept the economy depressed is the coalition's austerity policy. Having inherited a growing economy following Labour's post-crash stimulus, the coalition's public spending cuts and tax increases have choked off recovery.
The result has been the slowest and weakest recovery since records began, including the Great Depression of the 1930s. Our economy is producing almost 15% less than if the pre-recession trend had continued.
That's the price for allowing the financial sector free rein. And for believing that the government can cut spending, when the private sector is doing the same, and that – by some miracle – this will result in growth. It will not. It never has.
Former Kingswood MP