Friday 24 May 2013

Stark and Uncompromising

On one side is George Osborne. On the other side are Ed Balls and the IMF:

The International Monetary Fund is not usually known for racy language and dramatic press releases. When IMF chiefs come to national capitals, diplomacy is normally the order of the day.

So no one should be surprised that in London this week there was no public repeat of the IMF's previous comments that George Osborne's policies are "playing with fire". But even with more diplomatic language, the IMF's message was stark and uncompromising. And it echoed the warnings Labour has made over the past three years.

Having originally backed the chancellor's fiscal plans, the IMF has now declared that they are a "drag on growth" and risk permanent damage to our economy. It warned that Britain is "a long way from a strong and sustainable recovery", as confirmed by recent lacklustre growth figures that show we now have the slowest recovery for 100 years. And that is why the IMF followed through on what it has threatened to do for almost two years, by finally demanding "near-term support for the economy" with a £10bn boost to infrastructure investment.

In other words, against a backdrop of a flatlining economy and falling living standards, it called for a temporary rise in borrowing this year to kickstart the economy now and help to create jobs and growth for the future – just as Labour is urging right now as part of a more balanced plan that would get the deficit down in the medium term.

Of course there also need to be sensible spending cuts and tax rises to get the deficit down. But as this chancellor is finding to his cost, an unbalanced plan that chokes off the recovery and leads to rising long-term unemployment won't get the deficit down. This failure on growth and jobs is why the government is now set to borrow £245bn more than it planned – not to invest in creating jobs for the future, but simply to pay for the costs of its economic failure.

With thousands of construction workers out of work and interest rates at record lows, there is a growing consensus that investing now in improving our infrastructure – affordable housing, transport, school buildings – would give an immediate boost to the economy, encourage more private sector investment, and give us a long-term return as we strengthen our economy for the future.

This is what Labour would be doing right now – alongside other reforms, including a compulsory jobs guarantee for the long-term unemployed to get people off benefit and into paid work. We need a proper British investment bank to increase lending to businesses, radical reform of our banks, and a decarbonisation target set now for 2030 that would give energy companies the certainty they need to invest in Britain.

The IMF has set down a clear challenge. The question is how the chancellor will respond. But the signs are not encouraging. Osborne didn't stick around to listen to everything the IMF had to say at Wednesday's press conference in the Treasury. And his aides had already told the newspapers a fortnight ago that, whatever the IMF said, he would ignore it and plough on regardless.

After nearly three years of flatlining, the message from ministers is that any growth is better than no growth at all. Of course that's true. But slow growth is nowhere near good enough. It won't make up the ground we have lost over the past few years as other countries have raced ahead.

Nor will sluggish growth get long-term unemployment down, boost living standards, recoup lost business investment or generate the tax revenues we need to reduce the deficit. That is why the IMF said that if we do continue bumping along the bottom, we risk doing permanent damage to the economy.

Faced by a warning that a strong and sustained recovery is far from secure and that the risks are to the downside, a sensible and economically literate chancellor would heed the IMF's advice. Instead I fear that Osborne will once again put his own political pride before the national economic interest. If he does, it will fall to the next Labour government to pick up the pieces.

11 comments:

  1. "On one side is George Osborne and on the other side is...Ed Balls"

    They're just messing-as the Miliband-Cameron Gay Marriage embrace showed, they are on the same side on all the important stuff.

    Two Liberal Elite leaders-who cares which of them continues the liberal elite project?

    Serious politics is happening outside Westminster-where a social conservative alliance is building.

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  2. Well, not around a pro-drugs, pro-prsotitution party (that's the "free" market for you), it isn't.

    A party which had a formal policy in favour of SSM, something that Labour still does not have, until Cameron decided to legislate for it.

    Interesting to hear from someone who is too rich to care about the economy. "Serious politics", eh?

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  3. We're not pro-drugs or prostitution, they were only ever personal views, not party policy-and they're not the views of our socially conservative members and supporters.

    Nor are they the views of the thousands joining UKIP every month-or the Labour voters "dusgusted with the Bourgeois Bohemian concerns of the Blairite Party" as Peter Hitchens put it.

    The alliance Jenkins and co feared, is coming.

    On immigration, crime and everything else, Cameron and Miliband are peas in a pod.

    Conservatives have no representation at Westminster-so we're working to destroy this failed two-party system.

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  4. The personal opinion of Nigel Farage is the policy of UKIP, by definition. UKIP is that kind of party.

    All parties have a certain, generally quite high, number of "socially conservative members and supporters". Simply in those terms, so what? If anything, UKIP, a party of unbridled capitalism as a founding principle (unlike the Tories), will have relatively few of them, anyway.

    And it is an objectively verifiable fact that Labour supporters are not switching to UKIP. It simply isn't happening. Labour did not lose a single council seat to UKIP, and Labour took UKIP's only seat in Nottinghamshire, right there in the supposed UKIP heartland that is the East Midlands.

    The next General Election will be about the economy, and the lines are clear: Osborne on one side, everyone else including the IMF on the other.

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  5. Prolific Ukip supporters, even Peter Hitchens whose word you think is gospel condemns your party for being pro-drugs and therefore refuses to endorse it, that and the fact that is an amateur operation.

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  6. UKIP's policies are in UKIP's manifesto. Neither of those are.

    Whereas your leader spends his time saving Cameron and gay marriage, from the only conservatives in Parliament.

    Its an objectively verifiable fact that Labour voters are switching-those who voted us second in South Shields were mainly Labour supporters.

    The polls show our support is almost as high among Labour supporters as Tories.

    Read the polls Hitchens quoted.

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  7. those who voted us second in South Shields were mainly Labour supporters

    No, they were not. It says a very great deal that you assume that they must have been simply because they were in the North.

    Labour's share of the vote held up at more than 50 per cent (and that, for the second time in a row, on a nine-way split), while UKIP's number of actual votes at second place was well below the Tories' in 2010.

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  8. social conservatives are coming to us-where else would they go? To the two Parties of Gay Marriage?

    As Hitchens wrote this week.

    ""The danger, that the social conservatives might achieve a similar alliance, never before seemed very pressing. Now it does. ""
    ""UKIP is already attracting Labor voters, from among those disgusted with the bourgeois bohemian concerns of the Blairite Party. And Labour is very worried about this.""

    Just 152 (15%) said they’d vote Tory, 210 (21%) Labour and 109 (11%) UKIP....The UKIP vote seems to me to be Tory defectors...with a significant number of Labour dissidents now joining in"

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  9. And he's wrong. Verifiably so. Just making the last bit up, in fact.

    He despises UKIP, though. I don't. I would never vote for it. But I don't hold it in the scorn that he does, literally preferring not to vote at all rather than to lend it his support.

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  10. He's correct-and for obvious reasons.

    Unless you think most working-class Labour voters share Miliband's passionate support for the EU, gay marriage and mass immigration?

    In which case your as mad as him.

    Its us against the Liberal Elite now.

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  11. I know that most working-class voters are firmly back in the Labour voting bloc, the only one that they would ever consider. They might abstain, but they would never actually vote for anyone else. Just never. That's the way they are.

    Even working-class Tories, historically the most tribal voters in British politics, are either coming over themselves, or at least, since they are an ageing or aged lot anyway, seeing their children and grandchildren turn into core Labour voters.

    Even the old option of voting Lib Dem if you simply cannot bring yourself to vote for the other side no longer obtains in their case, among others.

    Such are the effects of the policies to which UKIP's, and your, only objection is that they do not go far enough. Truly, Cameron and Farage are two bald men fighting over a comb; over a small and still-declining section of the electorate.

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