710,000 reasons to be angry with UK economic policy

Posted on November 29, 2011


The Chancellor today told the UK public what they already knew about the future of the economy: growth is slowing to a near standstill and the UK will incur more debt because of the poor prognosis.  Yet while the Chancellor didn’t manage to surprise, the Independent Office for Budget Responsibility released its analysis which revealed precisely how many public sector jobs would be lost as a result of worsening economic conditions.  In fact, job losses are expected to rise from the already worrying 400,000 to a massive 710,000 public sector workers.  This is equivalent of to making an entire city unemployed.  And let’s be clear: this isn’t because ajax or acme factory has gone bust, or because no-one is buying cigarettes and milk from the corner shop, (those are additional job losses) this is because of a deliberate choice by the government to shrink the government sector.

Effectively, the government is pushing 710,000 people and their families into the wilderness. What does 710,000 salaries do for the local economy?  What is the so-called multiplier effect of the discretionary income that those 710,000 families have to spend?  What is the impact of withdrawing this income from the economy – replacing it with subsistence spending.  Because, let’s face it, the chances of re-employment for this 710,000 is pretty slim.  With unemployment worsening and no real growth where would the jobs come from? The answer is nowhere.  So, instead of engaging people usefully in the economy and in the society, the government has just signed the warrant for 710,000 families to be plunged into poverty.  The legacy for children in these households is untold lost opportunities and reduced life-chances.  But the immediate impact is surely on precisely those small to medium-sized businesses that sell the milk or make the widgets.  How many other people will end up unemployed because demand has been dampened to such a great extent that the local economy is just not viable?

Naturally, experts are divided about whether the UK Government’s actions are appropriate or not.  There are those who say that by reducing the cost of borrowing, the Chancellor has effectively increased the opportunities for investment in the UK; while others say that the Chancellor is simply driving the economy into the ground, with a real possibility of the national debt ending up as a larger sum in three years time than it is now (despite debt repayments).

The frustrating lack of ideas about how to generate growth locally and how to generate it sustainably means that the Government looks completely barren when it comes to long-term solutions.  There are some small nods to stimulating the local economy in the autumn statement but it appears these are not particularly well-regarded by industry.

What makes matters worse is the Chancellor’s admission that the UK’s growth projections are based on the assumption that Europe sorts itself out.  If this doesn’t happen, then the UK’s future will be far worse.  The chances of Europe getting its act together doesn’t look that great from this side of the Channel.

If we are going to have the equivalent of  a medium-sized city being forced out of work on the strength of economy ideology, we had better also have some excellent ideas for how to get these people working again.  So perhaps the UK really could benefit from its own Whitlamesque IT’S TIME campaign.  A national agenda for jobs is required urgently.