I see Alistair Darling is telling us he’s sure the recession is over. Presumably that’s why he’s been aggressively asserting the Treasury line this last week about the magnitude of the cuts he intends to impose on the economy, to rival the Tories. But the latest economic data is telling a very different story. David Blanchflower, previously a member of the Bank of England Monetary Policy Committee, argues that there are at least four reasons for believing the UK economy has taken another turn for the worse. Consumer confidence has suddenly dived, not only in the UK but also in the EU. The number of staff placed in permanent jobs has fallen compared to a month earlier. The latest quarterly CBI survey is decidedly downbeat, suggesting that the last quarter of 2009 did not see the economy strongly rebounding into growth. And unemployment almost everywhere is rising, particularly in the US, but also in nearly every EU country. That puts an entirely different picture on the landscape for the general election.

Instead of competing with the Tories about who is going to impose the biggest cuts in the fastest timescale, Labour should be majoring on a public investment programme designed to generate 0.5-1 million jobs over this next year in housebuilding, infrastructure repair and improvement, and the new green digital economy. Just 1% of the sum devoted to bailing out the banks, which now stands at £870bn, would be enough to fund such a project. Nor is it just simply the case that a rapid reduction in joblessness would be by far the most effective way to cut the deficit, by switching benefit receivers into tax payers. It would save 1.1 million Neets (those not in education, employment or training) aged 16-24 from the downward spiral into drugs, alcohol, homelessness and mental breakdown that unemployment so often brings in its wake.

Bookmark to: