My reservations come down to the issue that should have been addressed in the last few elections. Should we pivot towards stimulus or retain austerity measures.
We come back to that challenge now.
The country, large and small businesses will have run through reserves and borrowed heavily. Whilst this needs to get repaid at some point we can still borrow. The international financial institutions have made it clear there doesn’t need to be a rush to repay. In other words they are telling governments to do what is needed to maintain their economies and to stimulate post pandemic.
The defence spending looks like stimulus. The public sector pay freeze looks like a sop to the Tory back benches and goes against the idea of stimulus. The government can put cash into the economy through workers it employs. This gets spent and business benefits.
I understand that maybe the government wants to limit future borrowing and use what it does borrow in other ways. But this needs to be explained as part of its strategy. Not dripped in leaks or as incremental policy shifts.
BTW, It’s true that there will be times when the private and public sector are strong and so are wages. But there are times when the private sector is weak and the public sector is strong due to stimulus. This is strategic and a period of public sector contraction will follow. That’s why public and private pay are often out of sync.
The point is, that whilst you need a strong private sector to maintain a strong public sector, you sometimes need a strong public sector to stimulate the private sector.
The world needs a Marshal plan not austerity 2. Where is the leadership for that?