A tightening of the austerity screw is the last thing Britain needsby Ann Pettifor / October 15, 2017 / Leave a comment
“Strong and stable” seems of a world so far, far away. Yesterday’s Daily Mail headline “PM slaps treacherous Chancellor down” portrays a government in political chaos. Thanks to open, unresolved intra-Brexiteer warfare, ministers are unable to agree the basics of how to exit the European Union. This state of uncertainty intensifies just as the risks to British jobs and living standards are becoming starker and more potent. Ironically, just as we teeter towards the cliff, ONS data reveals that exports of goods to the EU grew over the last three months, while those to the rest of world fell back, a fact not devoid of dark humour.
Yet while ministers appear obsessed by trade, net trade comprises only a small part of UK GDP. Surely, through the coming period of Brexit chaos, government priority must be to “take back control” and maintain and support the domestic economy. This means a commitment to support not only investment technically defined as “capital” but also public investment in the health, education, and training of the British people. In that way, Britain will have some chance of weathering the storm.
George Magnus highlighted the OBR’s acceptance that UK productivity growth is likely to stay much lower than previously assumed. This leads to the inevitable conclusion that—on present course—the ever-weaker economy will lead this government to continue to slash public revenues. Yet even this gloomy OBR data underestimates the dangers. For the OBR has not yet factored in the far greater damage that will flow from a chaotic, unplanned Brexit in less than 18 months.
“Investment in the UK has been between 14 – 18 per cent as a share of GDP—while for France the figure is between 22 and 24 per cent”
At the core of government dissension is an unresolved dilemma—which ideological path to pursue? On the one hand, the fanatics within the Conservative Brexit camp support ultra-free markets and echo the deregulatory ideology of the US Republican Party. They press for a hard Brexit because for them, the future subjection of the UK—and of course our public services—to the economic interests of US capital is assumed to be beneficial, and therefore paramount. Hence the calls for the UK to join NAFTA. Yet at the same time, as polling by Lord Ashcroft and Legatum has shown, UK…