What is the Economic 'Plan B' that gets talked about so much?

[CogitoErgoSometimes]

Economic 'Plan A' is pretty tough going, admittedly but the best anyone seems to come up with for an alternative is some rather nebulous 'Plan B'. Has anyone actually seen 'Plan B' written down so we can take a good analytical look at it? Give it a rigorus assessment? Or is it - as I suspect - a vague way of saying 'not this, something else, but quite what, we're not sure'

[Iggly]

Well it would be madness if Osborne didn't have a back up or alternatives or something up his sleeve if this one doesn't work. That's all it means.

[2cats2many]

I expect it would involve slowing down on the cuts (there are still lots more to come) and injecting some more money back into the economy in the form of tax cuts/ vat cuts. This would then give households a bit more cash with the hope that we would start buying our way out of a recession (i.e. growth).

[Georgimama]

For the government to inject more money into the economy in the form of capital projects such as building roads/rails etc i.e. a big public sector spending spree. The idea being this will stimulate growth by creating work and trickling down through the companies given the work to do to individuals. My take on this (which is also Osborne's and therefore his Plan A) is that the public sector doesn't create growth, the private sector does, so instead the government needs to create the economic conditions for real growth to occur.

[Iggly]

"The public sector doesn't create growth"

How's that then? If the pubic sector spends money, it goes to the private sector who can then create jobs etc etc. Not sure I get your logic.

[Georgimama]

Because the money to pay for it came from 1) tax revenue 2) government borrowing. the tax revenues have been taken out of the private sector in the first place and the borrowing costs money.

[meditrina]

There is no Plan B.

The coalition isn't going to change course, and the opposition haven't actually formulated one. Unless and until someone credible actually comes up with some concrete ways of doing things differently (ie actual costed policies - not just headline waffle of "do this"), then there won't be one.

It'll be interesting to see what, if anything, comes up in the Labour Party conference. Their policy review has taken too long, and it's time they actually engaged with specifics.

There has been an announcement today on a pledge on a new future tuition fees cap. But I think that's a drop in the ocean of the debt crisis.

[niceguy2]

I'm thankful that Labour are now starting to state policies. For far too long they've been opposing everything whilst not saying what they'd do instead. So ok, as far as the tuition fees go, they'd cap it at £6k. Great. Not so great they are suggesting paying for it by yet another tax on the well paid and not lowering corporation tax, the latter of which i think is sorely needed to attract businesses to the UK to generate jobs. But hey, at least there's something to debate now.

As for plan B, I think its too soon to be throwing Plan A out and worrying about Plan B. The main problem at the moment is not the UK. As far as I can tell, whether or not we sink or swim depends more on what the rest of the EU does along with the US. We're seen to have done a lot to restore confidence already. There's not much we can do now but put pressure on the other countries to sort their shit out too. Especially Greece. The current situation is strangling Greece to a slow agonising death. Either they need to be rescued properly or cut loose.

[Iggly]

So if the government keeps cutting then all will be well we'll see! We don't live in a perfect economy so the rules don't apply as cleanly as we'd like.

[CogitoErgoSometimes]

I'd be personally very worried if any government was to flip-flop on something as important as the long-term economic strategy in some short-term effort to gain popularity. 'Student fees capped at £6k' seems to be exactly that, a popularity measure, rather than tackling the real meat of the problem.

[CogitoErgoSometimes]

"if the government keeps cutting "

I don't think there's any intention to 'keep' cutting. Last year's spending review meant public spending went down to a new level this year. I'd have thought the plan would be to keep it there rather than cut again.

[glasnost]

Millbank lackeys? Or are you all so deluded and manipulated by the right wing media (that'll be ALL of it including the BBC) to believe the shite you spout?? It's quite breathtaking your collective lack of awareness of the problems you pontificate on. You take as givens utter LIES. If you're not on an economic par with the peddlers of these lies you're fucked too.

You lot really should get out more.

And Cogito it's nice to see you wake up so early with cruel class war as your guide. "Pretty tough going??" Not for you I'm sure.

[Iggly]

Well some of the cuts were populist in the first place. Most government policy is spun for populist reasons. Hence crap like "the NHS is on the brink of disaster due to PFI", "we can't afford x/y/z, yet we'll spend billions reorganising the NHS"

[CogitoErgoSometimes]

So what are your thoughts Glasnost? I get the whole 'let's throw abuse and swear a lot' thing.... it's what teenagers do. But what do you think an economic Plan B should be? Make a contribution. Stick to the topic, perhaps.

[niceguy2]

Iggly, it's not about making cuts for cuts sake. Believe it or not, the cuts already made aren't anywhere near enough to balance the budget yet. Such is the scale of overspending. At some point we do need to balance our budget and pay our debt.

It seems to me that everytime a party has a conference, they chuck out some lame arsed idea to grab the headlines. One which they think plays well to their voters. So for Labour it's capping the tuition fees. Lib Dems's summer school and the Tories child benefit cuts.

The blunt truth is that in the current economic climate, there simply is no room for any party who wants to be taken seriously to say they would not make cuts. The only debate is over how much and where.

And you cannot make any cuts which are popular.

[glasnost]

Swear? Hark at her who told a perfectly calm, rational poster to "fuck off" on another thread and was reported for it but apparently this kind of behaviour has become de riguer on MN these days.

The topic is a total red herring as takes as read that these cuts haveto be carried out in the first place. Propaganda of the worst kind. Whereas. Actually. They don't. But if you repeat something often enough then the sheepy peeps will start to believe it.

[glasnost]

"The blunt truth is that in the current economic climate, there simply is no room for any party who wants to be taken seriously to say they would not make cuts. The only debate is over how much and where."

Just keep on repeating it like a mantra and the sheepy peeps.........

A pretty Orwellian truth, niceguy.

[CogitoErgoSometimes]

'Fuck off' is fine on MN.... You'd find that out if you read a little more. I'm also not normally reduced to profanities. I was reported? How marvellous!!!! Makes me feel....ooh... like a revolutionary!

Yet again, glasnost, you're going on about people being sheep and Orwell

[glasnost]

Like I wouldn't give you my thoughts on Father Xmas. Because he doesn't exist. I've wasted enought time interacting with you and I feel a tad dirty now. Must get back to the revolution.

BTW I think Plan B was much better as a rapper than a faux soul singer.

[Iggly]

Niceguy, I get that. However I believe that cuts are made along ideological as opposed to the most sensible lines. Which is fine, you get what you voted for but let's not pretend that "we're all in this together". However I think only cuts is madness and if it's working then a plan b is needed (didn't Ireland and Greece cut like mad?). It might mean re-jigging the cuts or even the messages coming out. For example, I'm in a high earning household yet feel the need to cut back on spending - not sure that's good for growth.

And the scale of the overspending - well some of that came from the banking crisis. Osborne is tackling the public spending mess but what about the banking side of things? That really pisses me off.

[BrandyAlexander]

A double dip is inevitable now and the only question is how deep. I do think there is no plan B. The global economies are now so interlinked that I think we will only be less screwed when Spain,Italy, Greece and importantly the US are sorted out. At the end of the day the UK is not the architect of its own recession (prob for the first time ever) and therefore I think we can tinker around the edges but we are not going to be the source of the recovery. Whoever is in government at that point (I suspect Tories) will be ones that get bragging rights. However, will they have been the architects of recovery? No, I think they will just have stemmed the loss with the severe cuts. I think its akin to the fact that Labour didn't cause the recession, it just didn't have any buffers to stem the loss and then closed its eyes and ears to what was happening, sticking to labour principles, so made the inevitable worse. None of the parties has a Plan B because none of them have the tools to be able to make one.

[BrandyAlexander]

A double dip is inevitable now and the only question is how deep. I do think there is no plan B. The global economies are now so interlinked that I think we will only be less screwed when Spain,Italy, Greece and importantly the US are sorted out. At the end of the day the UK is not the architect of its own recession (prob for the first time ever) and therefore I think we can tinker around the edges but we are not going to be the source of the recovery. Whoever is in government at that point (I suspect Tories) will be ones that get bragging rights. However, will they have been the architects of recovery? No, I think they will just have stemmed the loss with the severe cuts. I think its akin to the fact that Labour didn't cause the recession, it just didn't have any buffers to stem the loss and then closed its eyes and ears to what was happening, sticking to labour principles, so made the inevitable worse. None of the parties has a Plan B because none of them have the tools to be able to make one.

[CogitoErgoSometimes]

I think you've hit the nail on the head noviceoftheday with the phrase 'stem the loss'. Hearing a lot of comments recently that 'it's not working'... which is a bit like saying that taking down the sails has not stopped the Force 10 gale.

[Iggly]

I honestly don't think it's as bad as a ten force gale. Bad yes but not that bad - if it was we'd know about it.

[BrandyAlexander]

I would argue that it is bad already and we do know about it but the difference between this recession and the last (20 years ago) is that this time interest has been managed to keep it low. I think if you keep inflation low but rates go sky high out of control then everyone in the UK feels the pain because our lives are encouraged to be built around having debt. That's what happened in 1990. This time around the interventions the BoE has made so far to keep rates low and quantitative easing means thus far only families below a certain net income level are feeling the pain because they are impacted by inflation quite hard. The public sector cuts will now bring in another big chunk of families into the pain factor but until interest rates return to their natural place I don't think we will all be in it together.

So far the policies from all 3 parties are around stemming the loss. We're still in crisis mode and to a certain extent it is understandable that this is what they are focused on. Whether or not the governments plans are working depends on what you're looking at. Iirc none of the 200 odd pages of the Budget report in April (?) had anything sensible about returning the UK to prosperity and what the plans and cuts are intended to do is to stem the loss. I think the media/ commentators and the general public are expecting the plans to return us to prosperity but that's not what the actions are intended to do and I believe given where we have come from that's impossible until the Southern European countries stop imploding, the US sorts itself out and China takes its inevitable seat at the table and starts flexing its economic muscles.