With last weeks announcement that the UK economy shrank by 0.3 per cent over the last three months, everyone is holding their breath for the inevitable “triple dip recession” that will surely be just around the corner.
Once again, we’re spoon-fed vague waffle about how this is all down to the “austerity”, i.e. “cuts”.
That’s why this reality-check from Allister Heath is so worth reading in full.
Austerity – in the government sense – can mean either cuts to public spending or increases in taxation. We’ve had a lot of the latter – taxes continue to rise – but as Heath points out so clearly, the size of government has gone from 48.6% of GDP in 2011 to 49% by the end of 2012. We’re increasing the size of the state. How can we see a large supply-side boost to the productive sector if we continue this engorgement of the unproductive sector?
You can call the current government’s plan whatever you want: savage cuts, deep austerity, but it’s clear isn’t the austerity that we need.
The governments plan will eventually get us back on track, but we could get there so much faster with real reduction of government expenditure.
These “savage cuts” that Nick Clegg was banging on about… when are we actually going to get them? The status quo doesn’t seem to be working.