Osborn fucks up as Britain loses triple A rating(53 Posts)
Osborne and Cameron said the triple A rating was the key test of their policies so now what? Any danger of them admitting they've got it badly wrong and screwed the economy?
Would be better getting John Swinney MSP, the Scottish finance minister to sort it out.
The Tories have refused to take any advice, Scottish Government warned them that's what would happen by making the choices they did.
I think not, my love. Dave'n'Gideon don't do I Got It Wrong, innit.
As far back as February 2010, he told an audience of Tory activists: "What investor is going to come to the UK when they fear a downgrade of our credit rating and a collapse of confidence?" In the Tory manifesto, published weeks later, he said: "We will safeguard Britain's credit rating with a credible plan to eliminate the bulk of the structural deficit over a parliament."
George Osborne under pressure as Britain loses AAA rating for first time
George Osborne: More Dangerous than a Credit Rating Downgrade
It was announced today that credit ratings agency Moodys has downgraded the UK governments credit worthiness from AAA to Aa1. This in the same week that Chancellor George Osborne was forced to admit that both the national debt and the deficit of the UK are up as borrowing this year is on the rise. Whatever damage done to UK fortunes by the credit downgrade, surely the greater peril lies in leaving this discredited chancellor in charge of the nations finances.
Budget 2012 Revisited
George Osborne laid out his economic strategy in last years Budget. However, in reviewing these plans less than one year on, it is not hard to see the Chancellor is a straw man clutching at straws.
The Office for Budget Responsibility is slightly revising up in their growth forecast for the UK this year to 0.8%
The UK economy shrank by 0.4% in 2012.
Today, I can report that the deficit is falling and is forecast to reach 7.6% next year.
The budget deficit grew in November 2012 by £1.2bn.
Borrowing this year is set to come in at £126 billion, £1 billion lower than I forecast in the autumn. Borrowing will then fall to £120 billion next year, if you exclude the transfer of Royal Mail pension assets.
Spending rose 6.3%. Borrowing this year is set to overshoot official targets by £7bn.
We are also passing on our low interest rates to small businesses, through the National Loan Guarantee Scheme. This started operation yesterday. Barclays, Lloyds, the RBS, Santander and the new business bank Aldermore are all involved.£20 billion of guarantees in total will be available.
The scheme received only 15% of estimated respondents and was ditched in favour of the Bank of Englands Funding for Lending Scheme.
So there will be no deficit funded giveaways today.
Despite shockingly bad economic performance the chancellor gave an income tax cut to the UKs top earners (costing £3bn a year) and a cut in Corporation Tax (costing £2.6bn over two years) in the Autumn Budget of 2012.
The Office for Budget Irresponsibility
Osborne has side stepped personal responsibility for dodgy forecasting by setting up the Office for Budget Responsibility. The OBR was sold as an independent forecaster of the public finances led by neo classical economist and founding member of the Bank of England Monetary Policy Alan Budd. The OBR is actually housed just off George Osbornes office in the Treasury and their performance has been tantamount to propaganda over the years of their operation, as the picture above demonstrates.
The OBR has received criticism from most quarters outside the government and its circle of friends. The New Economics Foundation claim the OBR simply predicts the future required to justify the Governments ideological position.
The replacement of Osbornes pal Alan Budd by his cooler relationship with former IFS chief Robert Chote in August 2012 has seen the OBR appear to challenge government more and present a gloomier picture of the outcomes of Austerity policy than Budds OBR has hitherto but perhaps it is too little too late.
A Case of Ideology over Evidence
Our first benchmark is to cut the deficit more quickly to safeguard Britains credit rating. I know that we are taking a political gamble to set this up as a measure of success. Protecting the credit rating will not be easy The pace of fiscal consolidation will be co-ordinated with monetary policy. And we will protect Britains credit rating and international reputation. George Osborne, 2 February 2010.
Osbornes chancellorship has been an unmitigated failure by his own measures. Surely, if he was a believer in evidence based policy, Osborne would be assessing what went wrong and creating new policy which generated the growth and the ratings that he purports to seek. Instead, his reaction to the news reads as follows:
Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it.
In most peoples lexicon, a recovery is best characterised by a situation getting better. How this government has the nerve to call this a recovery when the economy is worsening and weve lost our AAA credit rating for the first time since the 1970′s simply beggars belief. This is the economic equivalent of administering rat poison to a cancer sufferer, and as the patients situation worsens yelling See, I told you they were sick! We must keep administering my medicine!
This chancellors boots are cemented and the UK economy destined to sink with him, because of his ideological commitment to austerity.
Osborne talked in his 2012 budget of being forced to make difficult decisions but since when has it been a difficult decision for a conservative chancellor to roll back the welfare state, privatise public services and cut taxes on corporations and high earners? This is business as usual for a Tory chancellor. Osborne is following the same plan he would always have followed, deficit or no deficit. The fact is this government has exercised fingers crossed economics, hoping that growth would naturally return as the markets settled and using the 2008 financial crisis as a fall guy for their ideological cuts. Instead, their policies have exacerbated the situation.
Georgie Boy, Its Time to Go
It is almost pointless to call for Osbornes removal by Prime Minister David Cameron, as like so many other stooges in this government they are following the path set for them. They are indeed, all in this together. But nonetheless, it does make sense to cry foul more generally and raise the pressure to unmanageable levels anyway. The truth is, this chancellor is eviscerating the UK economy along with its welfare state at a pace which would have made even Margaret Thatchers head spin. The man is an oaf, an ideologue and a menace to Britain at large. Georgie Boy, its time to go.
Surely all caring sensible people would have known these 2 would have fucked it up between them in 2010.
Thanks Ttosca for your input
This is more of a political problem than an economic problem.
Economically speaking the markets have factored the loss in some time ago. Even Ed Balls said "Economically, the credit rating decision itself makes no difference at all."
The only real problem is that Osbourne has painted himself into a corner by so cherishing the AAA status. Now we've lost it, he's handed the opposition a big fat stick to beat him with.
In the real world though timing is everything. And thankfully for us, there are hardly any AAA countries left so it doesn't look so bad. Markets would have reacted much worse two years ago. But given that France and the US have also lost it. And Germany is really the only major EU economy remaining with it, it's no longer a big thing.
I do think the Tories (in fact all parties) probably underestimated the scale of the problems facing the economy. Anyone thinking a few nip/tucks to policies and the economy would grow was sorely deluded.
The real question out of this is if you think Osbourne is bad, do you honestly think Balls would do better?
It was Osborne who made such a big deal of the AAA rating in the first place, and who said it would be the judge of his policies.
I think almost anyone would have done a better job than Osbourne. The UK is performing worse than most of the EU:
The UK has one of the slowest economic growth rates of all the G20 countries, new figures revealed yesterday, as George Osborne met finance ministers in Moscow.
And countries which have not pursued policies of economic bloodletting, like the US, have performed the best.
US economic growth rate revised up to 2.7%
The revised data confirmed that a 9.5% jump in spending by the federal government during the quarter - compared with a 0.2% decline the previous quarter - played an important role in the pick-up in growth.
So yes, Osborne, who has caused the UK to lose AAA status, who is likely to bring the UK in to an unprecedented triple-dip recession, and who is causing a massive increase in poverty in the UK is an utter fucking disaster and my dog would have been a better chancellor then him.
agree with ttosca - Osborne has been an unqualified disaster.
The UK also had one of the largest deficits to try to tame so it's really no wonder we're struggling. The thing is this is a long term problem to fix and we have to take the odd blip in context.
As for the US I am convinced their time will come. All they've done is kick the can down the road repeatedly. Time and time again they've not addressed their problems because of the political paralysis over the pond.
The time will come when the markets will force the US to make significant cuts. Only problem is that because of the size of the US market, the rest of us will be affected too.
Who would you realistically rather be chancellor?
I don't dispute that this is an embarrassment to the chancellor, but important to note that the commentary from Moody's was broadly supportive of the UK's austerity measures. The main reasons given for the downgrade were that that the government's efforts are being hampered by a 'weaker macroeconomic environment than expected' and a 'high chance of further shocks within the currency union'.
What a joke. There is no possible evidence that could sway the austerity ideologues that Osbourne's anti-Keynesian bloodletting is harming the economy.
I don't even think he's as foolish as his followers. For him, I think he thinks he has no other choice but to continue to destroy the economy and people's lives because to admit that he got it wrong would be too painful, would make him admit to himself and the country that he's a fool, and would effectively end his career as a politician.
The country is paying the price for this.
Well he was warned, several times.
I was impressed that GO used this as an opportunity to say that Moody's downgrade was a clear and ringing endorsement of his spending cutting and benefit cutting measures, and they were indicating that he was doing everything absolutely right and should proceed with "Plan A Let's shaft pretty much everyone" with no qualms.
Uh Huh Righto then.
Moody's have put the UK on a 'stable outlook' : 'this reflects Moody's expectation that a combination of political will and medium-term fundamental underlying economic strengths will, in time, allow the government to implement its fiscal consolidation plan and reverse the UK's debt trajectory."
Message deleted by Mumsnet for breaking our Talk Guidelines. Replies may also be deleted.
Yeah, keep on cheerleading for your team. That's what's most important here.
Rhiannon86 at least a Labour Government may not have been feathering their own nests at the expense of the vulnerable.
Nothing changes on here I see, all the Tory apologists (yes you NG2) making excuses for the government screwing up the economy, the tripleAAA rating was the holy grail but now its gone all of a sudden it no longer really matters, yeah right.
Anyone with any sense knew the Tories would screw up and I take considerable pleasure in saying "I told you so"
Economists have been advising a change in policy for over two years.
We're borrowing more. Austerity is failing.
Of course its not working it was never going to.
The Tories knew they would probably be a one term government as from the start they were determined to rule for the benefit of the rich and powerful, to destroy as much of the welfare society ad they could and to privatise the NHS.
The nasty party was always there under the rhetoric.
You can certainly make an argument that austerity isn't working, but you can't really say that Moody's said that it isn't working, because they didn't.
And the same old left wingers who are quick to criticise whilst offering solutions which if in a library book would be placed firmly in the 'fiction' aisle.
niceguy2 Sat 23-Feb-13 19:55:00
The UK also had one of the largest deficits to try to tame so it's really no wonder we're struggling.
Simply not true. Even Gidiot has admitted that the deficit was not as bad as he painted. He had to, he can't lie in front of a House committee. He's added over 30% to the deficit and more than that to government debt. It's all calculated, that's the bad part, these cunts know exactly what effect they're having, they're socialising debt and privatising profit.
There is a simple solution: since approximately 97% of money is fictional just scrap the pound as it is. Nationalise the Bank Of England and create a new pound, free of debt and interest free. Take the power away from the international fraudststers that are the banks and put it back in the hands of the people.
Would love a link NicholasTeakozy, to support your comment that GO added 30% to the deficit and more than that to the debt - not being snippy either, just interested.
I admit to being politically naive, and knowing nothing of economics, but I can't help thinking that this lot are the direct descendants of the officer class in the first world war who just kept sending the Tommys 'over the top' because they didn't know what else to do ...
The real question out of this is if you think Osbourne is bad, do you honestly think Balls would do better?
No sadly I think he would do worse
we need something between the two, both are extreme ends of the spectrum and we want and need a more middle ground some growth and some spend, with some tightening of belts and cutting back on spending.
What we have is to much one way and if they lose in two years - we will be faced with too much the other way - which is scary
A Conservative writer blowing the Tory deficit myth apart.
From what I can find from whichever political viewpoint the deficit is slightly lower than when the ConDems got in, but the debt has increased from £840Bn to £1.3Tn.
The Huffington Post article you link to is quite interesting Nicholas, and I take your point that the total debt has increased. But I think you might be wrong about the deficit being 30% higher, and I can't find anything about GO admitting that he exaggerated the deficit?
The market consensus on this development would appear to be "meh".
the main consequence seems to be that George Osborne looks a bit silly. I do not, personally, plan to lose any sleep over this. Nor is it likely to make me vote Labour at the next election.
Nicholas's Huffpost article links to footage of a select committee - doesn't say which one or when but it's clearly Osborne appearing in front of a select committee in Portcullis House.
> You can certainly make an argument that austerity isn't working, but you can't really say that Moody's said that it isn't working, because they didn't.
What they actually said was that in light a lack of growth and growing debt (see the full statement), the chose to downgrade from AAA to AA1.
You can argue that Osborne's austerity bloodletting isn't the cause of lack of growing debt, but then you'd be stupid.
> You can argue that Osborne's austerity bloodletting isn't the cause of lack of growing debt,
Sorry, lack of growth and growing debt.
Moody's full statement then we don't have to rely on selected excerpts, of which I am as guilty as anyone.
create a new pound, free of debt and interest free.
Ah yes...the magic wand solution. Problem with this is:
1) We would renege on our debts. How would you feel if you lent someone money in good faith and they turned around and decided not to pay you back? Our word would mean nothing. Our international creditors and by extension governments would go nuts. Remember how pissed off we were when Iceland said they couldn't/wouldn't repay Icesave account holders? And Iceland are just some tiny financially insignificant country. Not one of the biggest financial hubs in the world.
2) The monies repaid don't go to some fat banker counting his/her piles of money. They go into our pensions, investments etc. All of which would go down the toilets if we just walked away from our debts. So the people you'd be really hurting are the workers who are relying on pensions/savings.
3) Given our deficit is around £150billion per annum (give or take). Our debt repayments are £48 billion per annum, that still leaves us with £100 billion we need to borrow to make ends meet. And who the hell is going to lend us that if we've just walked away from our previous debts?
The result of your magic wand solution is destruction of savings/pensions and a £100 billion per year black hole which could only be plugged by slashing public services to the likes you've never seen.
You can keep your 'solution' thanks.
Gidiot admitting the deficit not all that.
Iceland has an economy that is growing at approx. 7%pa. They are jailing the fraudulent banksters whilst we shower ours with made up money.
Iceland have privatised the debt. Why should we, the people, pay the debts caused by a tiny minority? Why shouldn't they, the bankers and financiers, be forced to pay for their fraud? Oh wait, they donate to the Tories! <facepalm>
You are getting confused mate.
The problem for the Icelandic government was the fact their banks failed and the government wasn't big enough to take on their bank's debts.
In the UK we had a few banks which needed bailing out but thankfully our government was big enough.
The debt problem WE have is the debt borrowed by successive governments over the last three decades. This debt is by definition public. You can't privatise this. And just what fraud are you talking about? The banks & institutions did not force our governments to borrow this money.
Yes Iceland's economy is growing nicely now but don't forget that they had an almighty crash which was painful to see and since their economy is small, a large growth rate is easier to achieve than with an advanced economy such as ours.
In short you are comparing apples to oranges. Typical lefty response. Blame someone else and don't let facts spoil your point.
> The debt problem WE have is the debt borrowed by successive governments over the last three decades.
Public net debt as percentage of GDP:
I don't know why you keep lying when the data is right there in front of you. It just makes you look stupid.
Over the last three decades - from 1980 to 2008 - public net debt remained roughly constant.
There is a sharp increase from 2008, caused by the financial crisis. The debt is still at a historical lowpoint.
> Blame someone else and don't let facts spoil your point.
lol. You've been pretty much wrong about everything on this forum for the past year or so. Apparently you've learned nothing, either.
George is a fule who set himself up for this one.
He cast himself as the protector of the triple A, in much the same way Gordon cast himself as the banisher of boom and bust.
So lads, how's it all working out for ya?
The reality is that we would definitely have lost the triple A with Balls' plans. And there was a chance we might not under Osborne's. Hey ho.
It's not a mad disaster. The FSE rallied last night no?
What it does show is how pathetic both sides are. The right having banged on about how preciousit was, now claiming it doesn't matter. And the left, having previously dismissed its importance, now claiming it the central plank of our economy.
How can any of this shower expect us to take them seriously?
Public net debt as percentage of GDP
No mate, I do think it is yourself which misses the point. Debt as a percentage of GDP may have been higher in the past but it's rather irrelevant now.
As I explained in another thread, you try going to the bank and telling them that ten years ago you earned £10k a year and had debts of £25k. And now you earn £50k and based on history you don't have a debt problem so that £20k loan you want shouldn't be a problem. As a percentage of your income it's way lower right?
And I'm sure your bank manager will simply tell you that what happened in the past is no longer relevant to their lending criteria now. And it's the rules they have NOW which we have to meet in order to borrow the money we need to keep the government running.
Because what are we actually worried about right now? There's still no shortage of people who are willing to lend to us. The real worry is of course the interest rate we must borrow at. And unless we can tame our deficit and sort out our economy, we will be perceived as a higher risk than the likes of Germany/US etc and so our interest rates will reflect that.
The problem for the Icelandic government was the fact their banks failed and the government wasn't big enough to take on their bank's debts.
In the UK we had a few banks which needed bailing out but thankfully our government was big enough.
Sorry old bean, I'm going to have to break out the ROFLCOPTER.
Like a true Neoliberal you neglect to mention the reason the Icelandic banks failed: Iceland let them fail, just as we should have. Yes, we'd have faced short term financial pain, instead of long term austerity like we now are.
You want facts? Here's a doozy: when New Labour got in in 1997 the deficit (debt to income ratio) was 42.7%. In 2007, just before the crash it was at 35.2%. In 2010 when the ConDems took over a growing economy it was 45%. In under three years Gidiot has increased that to 73.8%.
I'd love to see any facts you have to back up your spurious and specious claims but like most on the right, you're probably not able to.
The rational given by the ratings agency is enlightening. Moody's was not questioning the need for an immediate and sustained deficit reduction, it was, in fact, expressing concern that debt reduction is slower than expected. The credit rating agencies have previously clearly said that abandoning our deficit reduction plan would definitely lead to a downgrade of our credit rating.
In the UK we had a few banks which needed bailing out but thankfully our government was big enough
No not thankfully.
If I was in the "business" of creating mickey mouse money not backed up by anything like deposits/savings or gold, lent you niceguy a wad of numbers on a screen then I quite rightly would be responsible for my own mess when you failed to cough up the debt in hard cash.
Banks make money out of creating debt......simple as. Did you also know that banks can deleverage? this is what has been happening and this is why they are not lending to business. Not because they don't have the money. So if they can wipe out mickey mouse money they can wipe out debt like the flick of a switch.
As for Gidiot we should march him off the premises.
97% of ALL money is debt and what is also worth noting is that the top 1% own 81% of all wealth globally.
So wipe out savings and pensions, I think not. Rather than socialising all banking risks it may have been cheaper to take back control of money supply, issue our own money and underwrite savings and pensions up to a modest value for individuals.
As it stands Gidiot's rich chums own you, everything you think you have and the ground you stand on.
> Because what are we actually worried about right now? There's still no shortage of people who are willing to lend to us. The real worry is of course the interest rate we must borrow at. And unless we can tame our deficit and sort out our economy, we will be perceived as a higher risk than the likes of Germany/US etc and so our interest rates will reflect that.
Just give it up. Seriously. Just stop. You're embarrassing yourself. First you claim that the problem is with the accumulated debt over three decades, and then when it is pointed out that we haven't accumulated debt, you backtrack and say the real worry is borrowing costs.
Borrowing costs are based on a number of things, one of which is debt as a percentage of GDP. Whilst it is true that the debt has increased substantially since the 2008 financial crisis, it is not true, as per your previous statement, that the borrowing costs are rising as the result of three decades of accumulated debt.
Secondly, as for 'tam[ing] our deficit and sort out our economy', the precisely point is that we are not doing so. The austerity measures are harming the economy; the AAA rating is lost (increasing borrowing costs), the debt has risen since the Nasty Party came in to power, and growth is amongst the worst in the G20.
You still haven't grasped the very basic concept that 'sorting out the economy' doesn't simply equate to cutting government spending. Cutting spending during a recession can increase the deficit, thereby also increasing the total accumulated debt, thereby increasing borrowing costs.
Do you really not understand this or are you just being dishonest? I suspect you really don't care about the shape of the economy and are simply using the debt/deficit as a way to promote your ideological small-state agenda.
If that's the case, instead of lying to the forum, and maybe even yourself, why don't just come clean and say that you you want a much smaller state in principle. At least people like 'flatpack' are honest about their agenda. You seem to try to rationalise your agenda as 'sorting out the economy' and just come out with incoherent nonsense.
No as usual you are putting words in my mouth.
The debt is a problem but the bigger problem is the deficit. If we first tame the deficit then we can tackle the debt.
Interestingly you didn't show this graph from your beloved site:
But then Ttosca you are one of those champagne socialists who believe we don't have any debt problem in the first place and if there is a debt problem then it's the fault of the rich anyway.
> The debt is a problem but the bigger problem is the deficit. If we first tame the deficit then we can tackle the debt.
The debt is large but not a crisis, and it was not caused by 'three decades of public spending'. It was caused by the financial crisis of 2008.
> Interestingly you didn't show this graph from your beloved site:
Nothing's interesting about it whatsoever. That's public net debt total, not as percentage of GDP. That figure is not relevant because what is important is the size of our economy and hence our theoretical ability to pay back our debts.
Using the example which you yourself quoted from me a few posts up, a man who owes £1000 and is a multi-millionaire with a mansion is in much better shape than a homeless man without any income or any home and who owes £500. The reason being, as should be obvious, that the homeless man currently has no job and no assets and no chance whatsoever to pay back even a penny of the £500 he owes. On the other hand, the multi-millionaire can easily write a cheque or do a bank transfer and immediately pay off his debts without any trouble.
> But then Ttosca you are one of those champagne socialists who believe we don't have any debt problem in the first place and if there is a debt problem then it's the fault of the rich anyway.
You're one of those people who wants to exploit the financial crisis - caused by the rich - to scale back years of hard-won rights and the welfare state. You pretend you're concerned about the economy but really you'll just do or say whatever it takes to cut spending.
Public spending is rising because of Gidiot.
The changes to welfare benefits will end up costing more. But that's good, because most of it will come from local authorities, and profit multinationals.
The NHS is being quietly privatised without a vote in Parliament. These unelected entitled rich fuckwits have just destroyed 70 years of hard won rights. I rightly hold them in contempt, they are utterly corrupt.
It is no doubt true that debt as a percentage of GDP is more informative than its absolute value.
But that's only a small part of the story.
Rather than dating it from 1950 it may be useful to plot national debt since records began:
This shows that our current debt level is not that high by historical standards.
However - look at the dates when our debt was at its highest: the first half of the nineteenth century, 1914 - 1931, 1938 - 1950.
These were periods around wars, when public spending was concentrated on the military. Up until the end of WW2 the state apart from that was small.
When the wars ended, and as debt was paid off, public debt as a percentage of GDP went into a sustained decline. This happened pretty much automatically, as there wasn't much non-military public spending anyway.
This isn't the case now. The public sector is massive and insatiable.
There are estimates of total national debt (public plus private and things like unfunded public sector pension liabilities) that approach 1000% of GDP, which puts us in 3rd place in the world behind the Republic of Ireland and Japan (just).
It will be very hard - perhaps politically impossible - to tackle this problem.
It seems to me we are heading for financial disaster. Under which party's watch is neither here nor there.
Our pension liabilities and generous health and welfare provision are totally unsustainable. No party will admit this as they will never win an election if they do. So they break election promises and tell lies.
Incidentally I would be rather more exercised about the prospect of major NHS reform if the UK was coming near the top of European league tables instead of round about number 15. But of course the NHS is the "envy of the world" isn't it so it can't possibly be changed.
> When the wars ended, and as debt was paid off, public debt as a percentage of GDP went into a sustained decline. This happened pretty much automatically, as there wasn't much non-military public spending anyway.
> This isn't the case now. The public sector is massive and insatiable.
If you actually look at the chart for the 20th Century, the debt did indeed decline steeply after the wars, and then leveled off in the mid 1970s. It remained roughly the same until 2008, when the financial crisis hit.
Secondly, your statement: "The public sector is massive and insatiable." is a non-sequitor.
The chart shows debt, not public sector spending. As I pointed out, the debt skyrocketed after the financial crisis, not because of years of public sector spending.
> There are estimates of total national debt (public plus private and things like unfunded public sector pension liabilities) that approach 1000% of GDP, which puts us in 3rd place in the world behind the Republic of Ireland and Japan (just).
Which would be nonsense.
> Incidentally I would be rather more exercised about the prospect of major NHS reform if the UK was coming near the top of European league tables instead of round about number 15. But of course the NHS is the "envy of the world" isn't it so it can't possibly be changed.
It comes in number 14. You should also bear in mind that:
a) Before the Nasty Party came in to power, satisfaction with the NHS was at an all-time high.
b) Pound for pound, the NHS is better value than many private systems, like the American system.
Of course the NHS can be improved, but cutting funding is not likely to produce better outcomes.
It's also remarkable that some people complain about essential public services like health, education and pensions being 'unsustainable'. Rather, they're essential. If the state cannot provide health, education and pensions, then it is is failing as a state.
You might want to consider the fact that wealth inequality has reached such gross extremes that a small percentage of the population owns the vast majority of the wealth. Corporate taxes are being cut, and many corporations evade or avoid tax altogether. Tax avoidance and evasion together cost the treasury tens of billions of pounds per year - maybe even £100 billion.
The fact is, it's not that there isn't enough wealth in the world or the UK. We have never been richer. We have enough wealth to feed, cloth and educated every child in the UK. Instead we have a situation where the use of food banks has increased massively.
It's not because the UK is undeveloped that we're using foodbanks. It's not that we don't have enough food. Our economic system is just so insane that it has nearly ceased to function altogether. We are now mired in a decade of depression and unemployment.
Why not fight to ensure that everyone has access to the essentials in life, rather than making excuses for politicians and the wealthy to further enrich themselves?
George Osborne hasn't just failed this is an economic disaster
Coalition austerity has delivered depression and a lost decade. Labour has to avoid locking itself into more of the same
It would be comic if the consequences weren't so grim. There is no economic failure, it turns out, which cannot be hailed by George Osborne as a vindication of the policies that brought it about. Faced with the decision by the credit agency Moody's to scrap Britain's AAA rating, the chancellor declared it was yet another reason to stick to austerity and the "clearest possible warning" to anyone who might think of breaking with it.
No evidence from the real world, it seems, can divert Osborne and David Cameron from their chosen course. The pronouncements of agencies such as Moody's, which gave the US investment bank Lehman Brothers a ringing endorsement just as it was about to bring down the global financial system five years ago, shouldn't be taken too seriously in themselves.
But for Osborne and the coalition, safeguarding Britain's credit rating has been a central justification for the most swingeing programme of cuts and tax increases for 90 years. Along with slashing the deficit, cutting borrowing and bringing down debt within five years, it was a central test of market confidence that Osborne and the coalition set for themselves.
And they have failed on every single one. The structural deficit and debt targets have had to be abandoned, as austerity plans have been extended to 2018. Borrowing is now forecast to be £212bn higher than planned over this parliament. Moody's downgrade report gives a clue as to why that might be: "sluggish growth" is now expected to "extend into the second half of the decade" with a consequent "high and rising debt burden".
In other words, Cameron and Osborne have failed in their central goal of cutting the deficit and debt precisely because their austerity policies combined with a refusal to get a grip on the banks, falling real wages and the boomerang effect of the eurozone crisis are squeezing the life out of the economy.
"Sluggish growth" is a polite way of putting it. Britain isn't just facing the possibility of a triple-dip recession, after the economy shrank in five out of 10 quarters since the summer of 2010. It's now in a fullblown depression. We're no longer talking about the risk of a Japanese-style "lost decade". The country is in the middle of one, and it stands to be worse than Japan's in the 1990s, according to the Office for Budget Responsibility's own projections.
The economy is stagnating at best, delivering the second-worst performance of the G7 economies in the past two years after Italy. There has already been a fall in living standards unmatched since the 1920s, with the average worker losing around £4,000 in real terms over the last three years. On current forecasts, real wages will still be at their 1999 level in 2017.
Now the falling value of the pound will intensify that squeeze, with little chance of the benefits for exports in a hollowed-out industrial economy where investment is still 15% below its pre-crash peak. That failure to invest, by corporations sitting on a £777bn cash mountain, has also fed into an alarming drop in productivity.
In these conditions, a fall in unemployment to 7.8% is treated as good news. But that has depended both on a sharp increase in involuntary part-time working and the productivity slump, which threatens to entrench lower living standards in the longer term while the much-vaunted "rebalancing" of the economy has yet to materialise.
When you add in the cuts to core public services, tax credits, housing and disability benefits that will hit the poorest hardest, this isn't just an economic disaster. It's a human one measured out in blighted lives for years to come, delivered in the service of a programme that has already failed in its own terms while shrinking the state and cosseting the corporate sector.
The Tories and their Liberal Democrat allies naturally still blame their predecessors' profligacy. New Labour must of course share the blame along with the entire City-bedazzled political class for promoting a deregulated, private debt-fuelled financial system which crashed and burned across the western world. But the claim that its own spending (with a deficit of less than 3% when the crisis hit) caused the crisis itself is an absurdity.
Polls show most people in Britain realise that, and increasingly oppose the government's reckless austerity. But without the unequivocal promotion of a decisive alternative, the risk is that falling living standards and deteriorating privatised services come to be seen as the new normal.
The shape of that alternative is clear enough: a large-scale public investment programme in housing, transport, education and green technology to drive recovery and fill the gap left by the private sector, underpinned by a boost to demand and financed through publicly-owned banks at the lowest interest rates for hundreds of years.
There's no evidence that extra borrowing for growth as opposed to increased borrowing to pay for contraction, which the bond markets have barely blinked at would lead to a confidence crisis. And the government already owns controlling stakes in two of Britain's biggest banks that it could use right now to boost lending and finance expansion.
Instead, ministers are arguing about how to sell off the 82% public stake in RBS, when even Margaret Thatcher's former chancellor Nigel Lawson wants it fully nationalised. Meanwhile the restive Tory right is pressing for still deeper cuts. Osborne is expected to announce some new infrastructure spending in next month's budget just as tax cuts for the richest and the corporate sector are about to kick in.
None of that is going to turn round the scale of the coalition's economic failure which leaves Ed Miliband with a crucial choice. Even if growth picks up in the next couple of years, there's no prospect of a full recovery under the coalition. And after years of falling living standards, Labour's chances of re-election are clearly growing,
So far Miliband has backed a limited stimulus, slower cuts and wider, if still hazy, economic reform. Given the Cameron coalition's legacy and the cuts and tax rises it's planning well into the next parliament, the danger is that Labour locks itself into continuing austerity in a bid for credibility. As the experience of its sister parties in Europe has shown, that would be a calamity for Labour but also for Britain.
I really can't be bothered ploughing through all this stuff. Can't you express yourself more succinctly?
Join the discussion
Please login first.