Vince Cable Speaks
May 21, 2011At last someone in government has begun to really spell out the issues with the U.K. economy. For too long politicians of every stripe have tended to portray the economy as temporarily stalled, but able to pick itself up and carry on. This is just not possible, as this blog has pointed out time after time. The economic boom of the Labour years (there is no evidence that the Tories, if in power, would have acted differently) was based upon an unsustainable theory of endless borrowing secured by rampant but meaningless property inflation. Industry was neglected and everything revolved around estate agents and shops. 75% of all bank lending was on property and the economy was declared to be one based on consumption and services, fuelled by utterly unsustainable house price inflation.
The so called growth was an illusion, without foundation in fact, because for every £ of growth there was another £ of borrowing, on which interest has to be paid and repayment made. The real worth of the economy, judged by its capacity to sustain its population, employ and care for them, has been shrinking. So has its net wealth.
What is happening now is a fresh start. It will also be a new experience. Britain has now slumped from fourth to seventh in the world ranking of GDP. It is no longer a market maker or price setter. Our leaders have been in denial of these realities. Labour remains gob-smacked and uncomprehending. All focus is on the budget deficit, but that is only the symptom of the underlying crisis, not the core. Nobody has really dared to speak out. Except, now, for Vince. Not for the first time either. That is why he is something of a national treasure. People listen to him.
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