By Michael Meacher, MP.
Originally published here, on October 1st
Osborne’s proposed goal of a budget surplus in the next parliament is absurd on several counts. First, the politics of austerity for a full decade 2010-20 is surely untenable. The unrest after just 3 years is already clearly mounting, and the idea that the lid could be held down for another 7 years is fanciful, especially since any further additional departmental or welfare cuts earmarked to be made during 2015-20 will be much harder to implement once the earlier reductions have been pocketed. Second, the plan is utterly dependent not only on securing those cuts, but also on achieving a long period of high growth. But where is that growth engine to come from, when investment has crashed and is shockingly low, wages are still falling, exports are stymied, and the eurozone is deeply troubled?
Gathering hopes that a hesitant recovery will endure are pinned on a growth model that has been proven not to work, based largely on consumer borrowing and housing mortgages. Osborne’s bringing forward stage 2 of Help to Buy from the middle of next year to next week will only exacerbate the the housing bubble that has already unmistakeably begun to develop.
Then there are the figures that Osborne rolls out. They don’t match reality at all. He predicts the budget deficit to fall to £43bn by 2017-8. But this is pie in the sky based on his present record. Despite his first 3 years of austerity the deficit has been stuck at £120bn and has not fallen at all, so what is the evidence for believing it will fall by two-thirds in the next 4 years? In fact every forecast made by Osborne on deficit reduction has been missed by a mile.
In June 2010, a month after the election, he forecast cumulative net borrowing of £322bn between 2011-15; this year that was hiked up to £564bn, an enormous increase of 60%. In June 2010 the ratio of public sector net debt to GDP was forecast to start falling in 2014; earlier this year that was postponed a further 3 years into the future, and it now looks as though that may be extended to 4-5 years. In June 2010 the peak level of net debt had been predicted at 70% of GDP; earlier this year that was ratcheted up to 86%. On that record, would you buy a second-hand car from this man?
Even more troubling is the collapse in investment which has dropped to just 13% of GDP compared with the global average of 24%. Indeed in terms of global ranking in the investment-to-GDP league, Britain is now 159th lowest in the world, just behind Mali, Paraguay and Guatemala. So, come on George, you may not have produced much of a recovery, but surely under your leadership we can try to catch up with Mali.