By John Millington
“It is time for all good citizens to raise their voice and say that we will not be the sacrificial lambs.”
That was the declaration of a leading UK economic expert Prem Sikka this week following the latest ONS figures showing 0.3 percent shrinking of the economy at the end of 2012.
The unsurprising bad news following the “Olympic bounce” was compounded by a Work Foundation study released yesterday showing Britain claiming top spot for the fastest upsurge in youth unemployment.
Mainstream commentators and economists have danced around the subject with some calling for the Bank of England to play a greater role and others suggesting that GDP figures were simply wrong.
Jeremy Warner, associate editor at The Daily Telegraph while acknowledging that more people choosing to do “grunt” jobs as he puts it or doing White Van man jobs is not “a healthy development” wrote:
“Does anyone really believe the GDP figures any more? OK, so I’ll rephrase that. Those that want to use the latest dollop of bad news for political purposes plainly do.”
He goes on:
“I don’t deny that the situation is grim, and there’s no quarreling with the renewed fall in manufacturing output. What would you expect with recession in Europe? But the official figures are increasingly difficult to square with a robust private sector jobs market, and you don’t get much sense, even outside the London bubble, that things are really as bad as the numbers suggest.”
As things are not that bad, he concludes:
“Olivier Blanchard, chief economist at the IMF has this week urged George Osborne to ease back on deficit reduction, but has he taken a look at just how dire the UK’s public finances really are? This would be very dangerous. None the less, there is a growing case for immediate tax cuts and increased infrastructure spending, funded by greater cuts in government spending further down the line.”
In other words, the public, both employed and unemployed workers, the sick and disabled should keep paying down the deficit caused by the banks, exasperated by the bailout of the aforementioned institutions by the taxpayer and cross your fingers that we get back to pre-crisis “business as usual.”
Other economic experts have called for an overhaul in the economy, starting with ceasing the cuts and for the government to play a much more active role within the market.
Professor Roger Seifert of Wolverhampton University insists that rather than cutting taxes, uncollected billions of “tax shy corporations” must be a priority.
“The time is therefore right for new state-sponsored investment funded by collecting the unpaid taxes on rich individuals and tax-shy corporations; by switching spending from damaging educational and health reforms into mainstream budgets; to liberate local authorities from overly tight central controls and let a house building resurgence create jobs and demand in local economies that will reduce the deficit and allow for some borrowing for further public investment.”
“As expected the UK economy across the board is stagnant as government policies fail to make any positive impact on growth. Even the IMF have suggested that the government should now adopt both a more flexible and a less austere set of programmes. With the US economy returning to growth, with sustainable growth in China, and with a massive stimulus package put in place in Japan … it is only major EU nations that are failing to act decisively to stop the rot. “
Urging the Labour leadership to seize the initiative he adds:
“Labour must seize the time and fight for such policies now and promise them if they return to government. It is not the time for cold feet under the shadow cabinet table … growth now as non-EU economies start to grow would boost exports and create the conditions for greater directed planned public investment.”
However in order to make these policies work, Left Economic Advisory Panel co-ordinator Andrew Fisher argues that the government has to be forced out by public pressure.
“This is where monetarist fetishising of the deficit gets you: no growth, a growing national debt and misery for the many…and the deficit growing too.
“And things are going to get worse: most of the cuts are only announced and are yet to be implemented, and are planned to continue until at least 2017 – unless we can force this government out.”
The government may not be quaking in their boots in the face of public fear and outrage at how the cuts are affecting their livelihoods but a few more NHS protests like the 25,000 strong Lewisham demonstration last Saturday, may see ministers questioning the strength of their so far seemingly impregnable ivory towers.