Why are all 3 political parties fixated on stagnation, falling wages, mounting debts, rising inequality & national decline?

It is often said that when all three political parties are locked together on the same idea, it is bound to be wrong.  Given the Tory-LibDem coalition determination to continue austerity unabated throughout the next Parliament, it is sad to see Ed Miliband telling the NPF forum over this weekend that “we won’t have the money……Britain still has a deficit to deal with and a debt to pay down”.   Of course the deficit has to be paid down, but the assumption that it has to be paid down by cutting public expenditure and benefits isn’t just harsh and cruel for its main victims, those on the lowest incomes, it is actually counter-productive.   The reason for this is that the public debt is what remains after the totals of net lending or net borrowing by corporations, households and foreigners have all been added up.   The latest evidence from the Office of National Statistics (ONS) shows that, following the austerity route over the last 5 years, public sector debt (the deficit), so far from reducing, is now likely to start rising.

Corporations in 2013 began raising their net lending significantly rather than investing because they didn’t have the confidence that the recovery would last.   Households, having run down their debts substantially since the 2008 crash, have now become net borrowers again, but on nothing like the scale before 2008.   Foreigners who (if they are willing) finance our balance of payments deficit now have to cope with a rising UK trade deficit, UK net income from abroad now significantly negative , and net UK transfer payments overseas, which are outside the government’s direct control.   The net effect of all these processes was that last year the deficit was £95.5bn.

However, the outlook for 2014, despite all the government’s rhetoric about fast recovery, is actually darkening.   Already there are official figures showing that the recovery in the construction sector has stalled, factory output has fallen, and the trade balance is worsening.   The fundamental weaknesses in the UK economy are now becoming painfully apparent: our very low rate of investment, manufacturing fallen to 10% of GDP so we can’t pay our way in the world, increasing government debt, and consumer demand too heavily dependent on asset price inflation (particularly an over-heated housing market).   Against that background it is almost impossible to see the deficit falling, and it is indeed more likely to rise this year.   If the ONS official figures for the first quarter deficit this year are projected forward, they suggest that public sector borrowing in 2014 will rise to some £105-110bn.

This is really a dead end for the austerity route.   The alternative, which cries out to be used, is for public investment to kickstart the economy (so long as the private sector investment strike continues) and/or for the excessively high sterling exchange rate to be significantly lowered so that UK manufacturing can begin to recover from its relentless post-war decline.

2 thoughts on “Why are all 3 political parties fixated on stagnation, falling wages, mounting debts, rising inequality & national decline?

  1. Is Ed Miliband really a neoliberal in disquise, by that I mean he concedes that banks should have full control of the money supply, creating it as a debt? Or is he ignorant of the fact that there are alternatives to the way in which money is created, and that government could discharge debt by creating money debt free through the bank of England? Much advice has been given on this by Lord Adair Turner, Steve Keen, Michael Hudson, and Anne Pettifor, Richard Werner, James Robertson and Positive Money.
    Tax Justice have estimated that 120bn is lost through tax evasion and avoidance.
    The way I see it, the only way out of 2.5 trillion approx private public and business debt is surely through debt jubilees, overt monetary finance (Lord Adairs term for debt free money) and tax reforms.
    It is not only an evil to continue with cuts, it is obviously economically incompetent.
    I read the article in the Guardian tonight in disbelief – only 198 people from the Labour Party were present at a private conference. So is the main conference in September a waste of time? If the decisions about finance are fixed then everything else is fixed. The base line principles of Labour are democracy – but increasingly, decisions are being controlled by and elite.
    This is not what Miliband promised – he said the Labour Party must change and rejected what he called trickle down economics, and accused Cameron of abandoning the people.
    What is he doing by giving into the banks with his incompetent cry of “less money around?”

  2. Ed is in control he’s not Red Ed he will walk over the Unions and of course he will sell his soul for power are the voters that desperate to have him and his party back in power I doubt it.

    Problem for ED is a simple one we have a good Tory Party in power now and slowly when things turn a corner wages will go up and for Ed we have no reason for a second rate leader in a second rate party.

    New labour is dead, old labour is dead, One Nation is alive, nope Dear boy Labour has died the labour party has died sadly.

    Miliband and Ball to people who really should have done some more education and stayed out of politics because they are not politicians they are in it for what they can make.

    I’ve lost interest in the Lib-lab-Can parties.

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