Osborne Admits: Things Not Going Well

The nation will be surprised to learn, many will be aghast, that Osborne is planning more cuts. This Blog did warn after the Chancellor’s Autumn Statement that it was based upon forecasts likely to be wrong. As indeed they are. The admission that the ‘economy is smaller than we thought’ is a show stopper, because if that is the case, everything else will be wrong too.

This is the problem. If your economic strategy is to balance the budget, as it should be, then it cannot be done by cuts alone. Of course cuts are needed in many areas after time has allowed good housekeeping to become slapdash, but those cuts are to structure and organisation, not the front line. The front line has to be held for the very reason that it has to spearhead the advance of the recovery. Too much of the front line has been thinned for it to have enough punch, so here we are again with tax revenues that disappoint and do not add up to sufficient to pay the bills. There is no real plan to push growth up. There are catch phrases like ‘march of the makers’ and ‘Northern Powerhouse’ but they do not appear to describe real events. This Chancellor has been at this for six years now. If the plan worked it would now be working.

Instead there is still more austerity coming next month (wrapped in the forecast of jam tomorrow).  Cuts shrink the economy and whatever is growing has to compensate for that, making net growth too weak. Add in adverse economic trends globally and the uncertainty of Brexit and while we are not quite in a perfect storm, many will get wet.

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