Tuesday, 12 April 2011

Too Much, Too Fast?

Since taking office last May, the Conservative led coalition government have begun to slash the deficit level of the United Kingdom. To do so they have implemented the biggest cuts to public spending that we have seen for generations. The big question is whether this radical approach is a stringent policy to place Britain on the road to recovery.

In May 2010, the National debt for the U.K, stood at 893.4 billion pounds with an estimates net borrowing of 157 billion for the 2010-2011 period, taking it to over a trillion pounds. In the general election the three major parties both emphasised reducing the deficit (roughly 185 billion) as a major priority, However neither the Conservatives; nor the Lib Dems suggested anything to the scale that they have so far implemented.

Initially they announced over 7 billion pounds in cuts with each government department having to reduce their finances, some by as much as 20%. Most notable of these cuts was the. 650 million pounds the Education department would have to make. Then in his June budget the real massacre occurred.

George Osborne announced an increase in VAT, from 17.5% to 20%, Child benefit and public service pay was frozen. This budget was continued by further announcements of the cancellation of Sure Start, the EMA, a reduction in charitable funding, and the trebling of Student tuition fees in England. The latter saw the largest protests in the capital since the Iraq war.

The governments obsessive desire to put deficit reduction before all else has meant that everything is for sale and no ones jobs are safe. With police, teachers, nurses, and public workers all expected to be made redundant and even Britain's forests were considered for sale. But is it all worth it?

George Osborne has claimed that these cuts are a “tough but fair” action on debt that was “unavoidable.” However fiscal reduction is not the sole factor in reducing a nations debt, you also need economic growth which has stagnated since the reductions have taken place, with GDP contracting 0.6% in the final quarter of 2011. This reduction is hardly surprising with the cost of living rising yet living wages remaining the same. Also as unemployment goes up, which it will continue to do during these cuts then more people will have less to spend and those, unemployed will only be spending money given to them by the government in benefits.

The government needs to change it's focus, rather than decrease spending they should be engaging in ways to increase economic prosperity such as trade and jobs growth. After all you don't take out a mortgage on a home and use your entire wage to pay it back in the first 6 months.

Osborne's comment of being “tough but fair” seem to be rankling more and more with the British people, as the perception of this government seems to be that of a group of individuals who don't know what it is to struggle financially. This was particularly apt when days before the rise in VAT came into affect the Chancellor was seen living it up in a 10,000 pound a week ch√Ęteau.

The major worry for many Brits as they endure these years of painful austerity is what will be left of Britain as a country when the deficit is finally reduced. With cuts in policing, teachers, overhauls of welfare and the NHS in the works, will we need to once again go into debt to reconstruct our destroyed public services while the world looks at this one time stallion of a nation who ruled the world as a now broken down cart horse.

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