The economic case against austerity in the UK is overwhelming. So where’s the left’s challenge? | Letters
In his article, Matthew d’Ancona (Osborne’s coup: converting Labour to fiscal conservatism, 22 June) accepts the conventional wisdom that Labour’s prodigal spending after 1997 made worse the global financial crisis a decade later. He quotes David Cameron asserting in 2010 that Labour had “maxed out its credit card” and Chuka Umunna’s rueful question: “If government can’t run a surplus in the 15th year of economic expansion, when can it run one?” The fact is that debt-to-GDP ratio fell from 42.5% in 1996-97, the year Labour took power, to 35.9% in 2006-07, the year before the banks failed. Moreover, no government surplus, however large, could have funded the £300bn exposure the UK government was forced to take on to keep the banks open, nor the fact that when, as a direct result of the bank failures, GDP fell 6% in 2009-10 – one of the largest and fastest falls in history – and tax take fell 18%. This was what caused the deficit, not prodigal spending on health, education and welfare, nor Labour’s failure to run a surplus.
• Matthew d’Ancona is of course correct about “George Osborne’s coup” in converting Labour to the false god of harsh fiscal conservatism. What is surprising is the utter lack of a robust counter-narrative, especially when there is an almost blindingly obvious response to the charge of New Labour economic mismanagement and excessive borrowing: just ask the bond markets. Was the bond market closed to New Labour? If not, then clearly the market gods sanctified New Labour’s economic credentials. A simple look at the interest rates of UK government 10-year gilts over the New Labour period should therefore be enough to win the argument.
The whirring noise that Matthew d’Ancona can hear in his ear is the sound of John Maynard Keynes revolving in his grave
Austerity – the policy opposed by 250,000 marching on the streets of London on Saturday – is a discredited approach
Too few yet grasp that cuts are about the drive to hack back the state, not the economyContinue reading...