Ditch the austerity rhetoric, Britain needs growth

19 08 2010

If, as opinion polls suggest, there is a majority in this country who accept that the Coalition Government’s austerity drive is necessary, then this would be one of the worst developments in the UK for some time. Why? Because it would imply that collectively we have turned our back on seeing growth as the way out of our problems.

An austerity mentality is the last thing we need at the moment. Penny pinching will not solve the problem of where the UK’s next economic impetus is going to come from. Businesses in the UK are sitting on piles of cash. The trend in results from Britain’s blue chip companies in recent months has been hugely increased profits, not just in the financial sector, but even in areas which apparently have been struggling such as aviation. These businesses need to feel that investing that cash in productive activities is the way to go, not storing it up like some 18th century miser, or perhaps worse, waiting for the next speculative bubble to erupt so they can pile in for more short term profiteering.

There are of course clear limits as to what this government, any government, can do to grow the economy, short of taking control of industry and investment directly. But political leaders are there to lead, to act as the collective voice for the aspirations of the country. By that measure the main aspiration of this country appears to be to stop a tiny minority of disabled people from ‘scrounging’. How lofty and inspiring!

The Coalition’s main claim to policy success in its first hundred days has been yet more reorganisation of education and the NHS, following on from years of New Labour tinkering. In those areas of the economy which desperately require leadership from the top to make things happen, such as investment in nuclear power and other large scale energy projects, it has vacillated.

Undoubtedly the Coalition’s biggest success so far has been to present public sector cost cutting as essential. But while everybody agrees that ‘scroungers’ and ‘bureaucrats’ should be cut, the logic of the 25% of cuts demanded from government departments is that 1 in 4 teachers will have to go, , one in four trains, one in 4 doctors if the ring fencing around the NHS is removed, and so on. Cameron and Clegg are fooling themselves if they think that most people are prepared to accept deterioration of public services and personal sacrifice without objection.

The Coalition is now worried enough about the success of its own austerity rhetoric that it is trying to row back a little. Nick Clegg said in a speech this week that the Coalition is ‘not just about cuts’. If the Coalition wants to avoid years of political misery all round it needs to ditch the austerity rhetoric and set some positive economic objectives, with as much government back up as possible. Economic growth will lift us all out of the mess we are in.

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