Time to move on Chancellor, as your thousand weeds bloom

Parry Mitchell 4x3

Parry Mitchell marks the Coalition’s 1000th day in office with some words of advice

Isn’t it odd that the fact that the Coalition government has been in office for 1,000 days is barely mentioned? I wonder why? Well, this afternoon, I am asking Ministers in the Lords to assess the impact of their economic policies during this time. In truth I already know their answer – “it’s all the fault of the previous Labour government”.

1,000 days gone and only 825 days until the next general election – time I think for them to change their tune.  

It’s about time they stopped blaming us, stopped blaming the Europeans, stopped blaming the Americans and started blaming themselves. We are where we are because the Coalition took the decision to follow a policy of economic austerity – and the fact is it isn’t working.

Our economy is static. Our people are suffering. Our businesses lack confidence. Banks aren’t lending.  Companies are sitting on piles of cash instead of investing.  Our trade gap is widening.  It’s a total disaster, much of which could have been avoided were it not for the obsessive compulsion of George Osborne.

Last week, we received the GDP figures for the final quarter of 2012 – and as we all know growth, or rather the lack of it, was minus 0.3%. We are heading for triple dip recession – unheard of in modern times. No wonder the prime minister was anxious to distract attention with his speech on Europe.

I know that Ministers in the Commons get tetchy when Ed Balls talks about flat lining. But with only 0.4% growth over the past couple of years, what else can we say? 

Now compare this to Germany, which has experienced growth of 3.6% over the same period, or better still the US where the figure is 4.1%. It’s generally very hard to compare one economy with another – there are always too many exceptions to the rule – but we can draw a parallel with the US. 2008 was a disaster for both countries with banks collapsing and confidence falling.

It was perhaps even worse for America, but today we continue to wallow whilst they are experiencing improving growth. Don’t take my word for it, just look at the Dow Jones Industrial Index, which is racing ahead. Fund managers know a good thing when they see it.

Indeed, Nobel Laureate Paul Krugman in a notable column in The New York Times has totally debunked the deficit hawks in his own country. The US did not pursue a policy of austerity but instead chose stimulus through massive public investment. With interest rates kept at rock bottom, the result is that public spending and deficit as a share of GDP have started to decline of their own accord – and reasoned forecasts suggest the latter will be below 3% of GDP by 2015.

It’s really easy economics to understand, so why does our Chancellor take quite the opposite position? If our economy were recovering then maybe it all would have been worth the pain – but it’s not, and everything is heading south. 

If after 1,000 days our economy is teetering on the brink of a triple dip recession, if our credit rating is close to being downgraded, if our national debt is rising, if our productivity is falling and if our trade gap is widening – isn’t it about time that the government starts taking responsibility for its own failed economic policies?

Lord Parry Mitchell is a member of Labour’s BIS team in the House of Lords

Published 30th January 2013 


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