Tuesday, 25 January 2011
Osborne's weather excuse doesn't cut any ice
Yes, the snow had an impact. Undoubtedly. But even without it the ONS concedes that 'growth' would have been "flattish", i.e. no growth.
The reality is that George Osborne's own 'crowding out' explanation for the crisis and recovery strategy (as previously denounced by LEAP) undermined the economy in Q4 of 2010.
As I said when speaking to reps from the Northern Irish public sector union (NIPSA) earlier this month, there are 3 problems with Osborne's economic strategy (you can download my powerpoint presentation from the NIPSA website).
Firstly, is Osborne's own 'independent' Office for Budget Responsibility, which said in June 2010 that if 600,000 public sector jobs were cut, the knock-on effects would mean 700,000 private sector jobs would be lost. In the CSR in October he said that actually only 490,000 public sector jobs would go. However, the Chartered Institute for Personnel and Development looked at his figures and estimates that in fact there will be 725,000 public sector job losses as a result of the £80billion cuts.
Secondly, unemployment is rising. Long-term unemployment (those unemployed 12 months or more) is now at its highest since February 1997 and youth unemployment is the highest on record. The private sector is not 'crowding in' to the space left by the public sector.
Thirdly, Ireland. What Osborne is implementing in the UK has been tried in Ireland: it doesn't work. The public sector been slashed, corporation tax is lower than almost anywhere else in Europe and the economy is in a death spiral.
In Q1 of 2011, we have the VAT rise, rising inflation, rising unemployment and declining capital spending from central and local government to impact on the figures. And there's be no snow for George to hide behind.