George Osborne will not be blown off course by bad weather. God help us all.

Britain’s ‘recovery’ went into reverse today, a “stunning blow to the Government” according to the Evening Standard. Howard Archer of IHS Global Insight said: “This is a stunningly bad outcome”. Hetal Mehta of Daiwa Capital Markets Europe said: “This is an absolute disaster for the economy”.

George Osborne said: “There is no question of changing a fiscal plan that has established international credibility on the back of one very cold month. That would plunge Britain back into a financial crisis. We will not be blown off course by bad weather”.

Baldrick Osborne might well have said: “I have a cunning plan” or perhaps “Crisis? What crisis”.

Equality of sacrifice? No chance. Cameron, Osborne and Clegg as true class warriors will look after the rich.

David Cameron says that there will be “difficult decisions” on pay, pensions and benefits.  He says that there will be “painful” cuts ahead, but that in dealing with the deficit “our whole way of life” will be affected but not in a way that hits the vulnerable or “divides the country”.  Pull the other one, Dave.  Already cuts are being announced in services for vulnerable people in Brighton and in East Sussex.  Council funding from central government has been cut.  These cuts are being passed on to the poor and vulnerable.

I haven’t used illustrations in this blog before (other than the almost photographic likeness of me).  But this cartoon from the Great Depression, reflects to a certain extent what I think will happen over the next few years.  The mantra will be that there will be ‘pain for everyone’,  ‘We will all be in this together’. and that ‘There must be equality of sacrifice’.

My only disagreement with this cartoon (apart from the gender limitations – in my last post I said low paid women will suffer the most) is that I think the rich and the very rich will benefit from the shock and awe approach planned by Cameron, Osborne and Clegg.  They are true class warriors, disciples of Milton Friedman, and they will look after their own, the rich and the very rich.

Did Lib Dems really vote for cuts that will hurt the poor and benefit the rich?

David Cameron has said, predictably, that the UK’s economic problems are “even worse than we thought” and that painful cuts to tackle the deficit would affect “our whole way of life”.

This is straight from the Milton Friedman approach to crisis response. First the shock – a financial crisis that requires painful action; and then the awe – cuts that affect our whole way of life.

So what should we expect now? First, massive cuts in public expenditure, far more extreme than the cuts in the Thatcher era. Then wholesale privatisation, a token amount to the voluntary sector, but mainly to the private sector where huge profits, made fo by the tax payer, will be made.  And there will be tax cuts to “incentivise” private sector investment.

This will produce a redistribution of wealth from the public sector to the rich and the very rich.

Anyone who objects will be ridiculed by the media, particularly the media controlled by Murdoch and Desmond. They will ignore or dismiss alternatives to cuts.  For example, why does the government not first begin with the £40 billion of uncollected taxes?  Because it is their friends who would be required to pay what they owe.

Instead there will be cuts to the “welfare bills”, public sector pay, and funding to the voluntary sector.

Just wait and see: there will be new tax exemptions allowing further billions of tax revenues to go uncollected, and it will be the rich and the very rich who will benefit, the friends of Cameron, Osborne and Clegg.

If Cameron is purely motivated by society’s well-being, he should ensure that those with the greatest ability to pay, do so.  And those who struggle even at the best of times, be spared. But no, everyone will pay, and the pain will be felt most by low paid men and women.  And given that low pay affects women more, it will be women who will be most adversely affected.

Is this what those who voted Lib Dem thought that they were voting for?

Candidates and political leaders are under enormous pressure. We should give Gordon Brown a break and focus on the economy

What a silly storm in a tea-cup over Gordon Brown’s unfortunate comment calling Gillian Duffy a “bigot”.  He shouldn’t have said it, he acknowledges this, and has apologised.  But I for one have a huge amount of sympathy for Brown and, for that matter, all party leaders and all serious candidates.  They must all be under unbelievable pressure.  Brown in particular has copped so much criticism, personal abuse and character assassination.

All of us say things behind closed doors that we would not want repeated, let alone recorded and broadcast on every available outlet. 

But there are two issues far more important than an unfortunate error  by a man who must be exhausted and stressed beyond endurance. The first issue is about immigration.  Why on earth is the media broadcasting ignorant and inflammatory views from bigots who are saying that immigrants are taking all the jobs and houses.  The media have a responsibility to ensure that this incendiary issues is not allowed to stir up racial and other community tensions.

The second issue is the economy, particularly the collapse of the Greek economy.  Portugal will be next, then perhaps Spain, Italy and …. Britain?  Tomorrow night is the third Leaders’ Debate, and the theme is the economy.  This is what the debate in the media should be about, and this is the issue that should and may yet decide this election.  IT’S THE ECONOMY, STUPID!!!

Green Shoots of Recovery?

Yesterday I criticised politicians who are raising hopes of an early recovery from recession, saying they were perpetrating a cruel hoax on the public.

Even if the economy begins to grow again, unemployment will continue to rise.

There are 890,000 people under the age of 25 now unemplyed, and likely to jump to over 1 million when the Class of ’09 join the dole queue later this month.

One of my favourite ecocomists, David Blanchflower, formerly a dissenting yet prophetic voice on the Bank of England’s Monetary Policy Committee, described this as “a tragedy for the nation”.

The Bank of England, in it’s latest quarterly bulletin, reported that more than a million households are now in negative equity, and house prices will probably fall a further 15%!

David Blanchflower, writing in Thursday’s Telegraph, said: “We are faced with a toxic cocktail: sliding house prices, rising negative equity, inadequate levels of credit” (needed for growth to sustain economic recovery) “soaring unemployment and zero, or even negative, wage growth.

“In such circumstances, it is almost academic to try to pinpoint whether economic growth is returning.

“The simple fact remains that we have yet to realise just how painful the coming years are likely to be”.