On austerity, has the Chancellor been vindicated?by Prospect Team / September 18, 2013 / Leave a comment
The Chancellor has finally said it. In a speech in September, George Osborne claimed that, when it comes to the economy, “Britain is turning a corner,” and pointed to a “growing body of evidence.” On cuts and austerity, has he been vindicated?
YES–Mark Littlewood: The doomsayers were wrong. George Osborne’s efforts to get the UK’s chronic budget deficit under control have not crashed the economy. It now appears a modest level of growth has returned to the economy and private sector employment has remained impressively robust.
This is not what the deficit-deniers predicted. At the outset, they enormously overstated the cuts to government expenditure, with the enthusiastic collaboration of parts of the media. In real terms, the coalition is reducing spending by a little less than 1 per cent per annum. By the time of the next general election, it will be spending 96-97p for every pound that was being spent by Gordon Brown when he left office. So, there are indeed cuts, but they can hardly be described as vicious. (How or where these savings are being made is, of course, a different matter).
Looking back on Osborne’s emergency budget of June 2010, the usually temperate Will Hutton of the Work Foundation described these modest spending reductions as “brutal.” The Labour frontbench labelled his plan “reckless” and claimed it would “throw people out of work.” The unions predicted a double dip recession. Nick Robinson of the BBC described the plans as a “massive gamble economically and politically.”
Now, such hyperbole sounds rather ridiculous. While Osborne’s opponents were recently rubbing their hands in anticipation of a triple dip recession, the updated statistics suggest there wasn’t even a double dip. This is boringly bad news for headline writers, but it’s nonetheless a fact. Similarly, the growth of employment in the private sector has more than offset redundancies in the state sector. The coalition’s opponents now complain that these private sector jobs are not as well paid or secure as they would like. But that is shifting the goalposts. Back in 2010 they would have predicted a fall in employment with total, misplaced certainty.
We are witnessing a drawn out recovery from a dreadful crash. In stark contrast to Nick Robinson’s analysis of 2010, the Chancellor has been cautious with the public finances, to the irritation of those of us who would…