With the UK's economy still in a very unstable condition, the race is on to attract the British voters to either support Conservative cuts or Labours spending, in order to regain economic growth, restore consumer confidence and reduce the massive budget deficit. by Tom Randall
(liberal)
Sunday, February 21, 2010
Two key stories this week, really exhibit the kind of dilemma British voters are going to have when choosing a political party in the general election this summer. The first comes from Gordon Brown's Labour rally today in Coventry, urging voters to give Labour a second chance, fighting hard against the Conservative opposition. The second comes from 60 senior economists signing two open letters, backing the Chancellor's decision to hold off government spending cuts until 2011.
The two are intricately linked. In Gordon Brown's rally, whilst unveiling the Labour election slogan, a future fair for all', he attacked the Tories, stating they would put the economy at risk'. Labour, with Alistair Darling postponing public spending cuts until next year, proposed to secure the recovery of the economy, without threatening its revival.
This outlook of delaying cuts, does not agree with Conservative policy of dealing with the economy, whilst trying to reduce the UK's massive budget deficit, set to rise to 170 billion this year. The Tories want to start cutting and freezing public spending this year; the fear is with this policy, it will throw the UK economy right back into a recession, completely halting any economic growth.
Controlling public spending will be very important to reduce the budget deficit; however it must be done when there is certainty about the stability of the condition of the economy. Unfortunately at this current moment it is very unclear where we stand, and thus decisions should be made in a year's time, when we have a much better outlook. Indeed as Vince Cable, economic spokesperson for the Liberal Democrats, said, We've got to look at what is happening in the real economy and not be based on political dogma'.
It is this verdict which caused the support towards Labour's plans to not cut spending for another year, and why Brown today criticised Conservative policy, in the attempt to win over those former Labour supporters who had joined the Tory party. At this point in time unemployment is too high, with people not spending enough to provide full employment. In this situation, it is up to the government to keep spending in order to stop unemployment rising further. Government cuts should not take place until recovery is seen to be well under way, with unemployment decreasing fast.
The first key priority of dealing with the current economic climate is to gain robust growth. Right-wing governments are almost scaring the public with huge deficit figures and setting the future as bleak and miserable. But they do not mention the automatic reduction in the debt that would be achieved once growth resumes, and consumer and firm confidence in restored.
But this recovery is going to be very slow and painful. If this year we will experience very tight growth, greater cyclical borrowing will be needed. In comparison with other EU countries, our gross debt is set to be 82%. With debt this high, we will loose fiscal headroom', to which the space of is how far we can deal with more financial slip-ups in the future year. Greater financial tightening is therefore needed, which is already underway, with VAT rising again to 17.5% and taxes increasing in April for those earning over 100,000.
It is too difficult to say whether Labour or Conservatives are right, with such differing economic policies to solve the economic crisis. It is with this concern a decision can be made, however, as with this difficulty of choosing between the two main parties, the left-wingers have my vote. The economy is too unstable to risk cutting public spending, in a too early attempt to cut the budget deficit. This deficit will be cut in the future, but under a stable left-wing society, where growth and confidence is restored from government fiscal support.
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