Osborne’s Autumn Statement won’t rid Britain of his ideological hang-ups

Wednesday’s mini-budget statement is really Osborne’s last chance to fix Britain’s dire economy before the election.   The IFS has just predicted that austerity will last till at least 2018 – a lost decade like Japan.   The re-balancing of the economy, the’March of the Makers’, which Osborne lauded has simply not happened.   Neither the government’s Funding for Lending programme to get money flowing to industry nor getting pension funds to underwrite infrastructure projects has produced any significant stimulus at all, and anyway the corporate sector continues to sit on a colossal cash surplus of £800bn but without investing because the real problem continues to be the lack of aggregate demand.   The whole purpose of the austerity trauma was whatever the cost to bring down the nation’s debt, yet it is actually rising because the steady decline in Exchequer receipts through falling incomes exceeds the rate of cutting the deficit.   And now to cap it all, the one flagship left in the Osborne armoury, the maintenance of Britain’s triple A credit status, is seriously under threat from a downgrade by the rating agency Moody’s if Britain falls deeper into recession – just as fears of a descent into a triple-dip rfecession begin to take hold.   At that poing the Osborne strategy is dead, kaput.

What Osborne is likely to attempt on Wednesday is a big boost to investment and construction.   Investment has fallen dramatically since the pre-crash peak in the first quarter of 2008 by 19%, including business investment 10% down.   Manufacturing has declined by 8%, but construction much more by 18%.   Industry wants time-limited 100% capital allowances  for 2 years to jump-start investment, while in the case of construction the aim will be to get pension funds and sovereign wealth funds investing in Britain’s infrastructure, underpinned by the government’s guarantee.   But even if these materialise at all, they are phantom billions that are not part of the public budget at all, but simply conjured out of thin air by government guarantees.

Industry’s justified gripe is that Osborne has cut public capital spending (on which the private sector depends for up to 40% of its activity) too hard while the government’s current outlays have continued growing.   We will however again be assured on Wednesday that Osborne will do anything to get growth, even though the one thing which will produce growth is the one thing he won’t do.   His neoliberal hang-up is that the exclusively for the private sector and the State should keep out.   William Jennings, the US Presidential candidate declared famously in 1896 that America was being crucified on a cross of gold.   Britain today is being crucified on a cross of ideology.

 

3 thoughts on “Osborne’s Autumn Statement won’t rid Britain of his ideological hang-ups

  1. The Coalition will fall at the next election because it will have failed to garner any growth – and it promised growth.

    Labour on its own or in a coalition with LibDems (surely not) or UKIP (crikey) will get elected and will promise growth. Five years further down the track growth will again not have been delivered and we will keep flip flopping five year on five year between capitalists and ‘nucapitalists’ delivering at best stasis for the rest of my life.

    Will anyone or any political party here have the bottle to stand up and say well actually after decades of cheap energy; decades of run away personal, corporate and national debt; decades of stuffing the atmosphere with C02; the party is over? There will be no more growth in the terms we have all been accustomed to.

    Japan’s banking crisis was well over 20 years ago and Japan has never got back to ‘growth’.

  2. …..and, in the meantime, the chronically sick and the disabled and the vulnerable get brushed into a corner and thrown a few crumbs-if they’re lucky.
    There is no honour in this government. Iain Duncan-Smith keeps saying that his butcher…sorry….REFORM of the welfare state will be the best thing since his last expenses payment. But not for those who are proffered on the altar of privatisation. Every company associated with workfare makes money. The victim, who could be a jobseeker, disabled or chronically sick, gets the benefit payment. No extras for transport etc (unlike our illustrious chancellor), just bare benefit. Paid by the taxpayer, as Jeremy Kyle just lives t remind us all. So, in reality, the STATE is subsidising private enterprise…..er….that’s NOT what I paid National Insurance for. Makes me sick…..

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