Thursday, 26 July 2012

Mr Osborne: doing almost anything would be better than nothing

 Oh dear. Britain's economy is stuck, and the wheels (political as well as economic) are spinning in the ditch. Gunning the engine and talking about 'growth' and 'the march of the makers' seems only to dig us deeper into the quicksands.

The news that Britain's recession is deepening is the most depressing public policy detail of recent years. It's an appalling situation. There's been no growth at all - overall - since early 2010. We're still not as wealthy, as a people, as we were in 2007-2008. It's the longest recession in our history. It just makes anyone who actually has an economics training want to run out, grab people by the lapels (especially Ministers) and shout: 'we told you so! We told you so! We told you so!' and so on. And on. Honestly. The urge to run outside and shake one's fists at the sky is almost irresistible.

But that won't help. It'll make me feel a bit better, no doubt. But ranting isn't everything. I suppose.

To be honest, we're now desperate. Recover will take hold eventually. It always does. We were all in despair in 1932-33, 1973-74, 1981-82 and 1992-93. But each time human ingenuity and human creativity pulled us out. As it might again, as Britain's economy is fundamentally quite strong. Ignore all those Ministers going round with long faces saying: 'ah, well it's all deep-seated, you see... productivity... banking unwind... blah blah blah'. The truth is that Britain grew strongly for nearly a decade and a half because her industrial and service record got better, and stayed better. And those fundamentals have not gone away.

This rapid cuts strategy was never going to work, leaving us further and further from our deficit reduction targets, the Chancellor discredited, and the Prime Minister talking about further cuts all the way through to 2020. That won't wash any more.

We're close to the time when doing almost anything that will stimulate activity and confidence would be good - no matter what. The reader will know that this column takes a spend-spend-spend Keynesian approach, focusing on infrastructure and more borrowing. But that needn't be the only way that this works. We could go down a right-wing or a neo-liberal route if you really want. Sweep away more of the restrictions on housebuilding, the low levels of which are a national scandal. Cut taxes. Abolish National Insurance for firms taking on young people from work schemes. Lower interest rates to 0.25 per cent - or even to zero. But for the love of God, stop digging us into this mess any further.

Meanwhile, it's real people - and real businesses - who suffer. All that pain, all those sleepless nights worrying, all that getting on bikes and looking for jobs. What a shame. What a tragedy.

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