SCOTTISH First Minister Nicola Sturgeon put the cat among the pigeons yesterday, declaring austerity wrong and saying its end was the price of backing Labour in a minority government.
In a speech in London the Scottish National Party leader said Chancellor George Osborne’s economic policy had “failed even on its own terms.”
Its mistakes had cost every single person in the UK £2,500 in rising national debt, she said, adding: “And now, when the evidence tells us that austerity hasn’t worked, the UK government is now telling us is that we need even more of it.”
The SNP leader predicted that current plans to slash Britain’s debts would have “severe” consequences for household debt.
“Most of the economic growth the UK government expects will come from household consumption,” she said.
“But in a time of low wage increases and high inequality, this can only happen if household spending rises more quickly than household incomes.
“That will lead to an increase in debt.”
She said the SNP would be pushing for a “more rational economic policy.”
Debt should be reduced, said Ms Sturgeon, but “more gradually” than proposed.
“If you limited real-terms growth in departmental spending to 0.5 per cent each year, it would reduce debt as a share of GDP in every year from 2016-17.
“It would also permit — compared to current UK government plans — a further £180 billion of investment across the UK over the next four years,” she claimed.
But experts warned that her “anti-austerity” alternative fell short of the action needed to stimulate the economy.
Socialist Economic Bulletin analyst Michael Burke said she was “barking up the right tree” but “0.5 per cent of anything isn’t very much.”
“Nicola Sturgeon is right to say austerity has failed and should be abandoned,” but “what seems to be proposed falls way short,” he said.
“Under Gordon Brown there was a moderate recovery fuelled by a temporary increase in public investment.
“The Tory-led coalition cut that by 2 per cent of GDP.”
Mr Burke said: “You would need to restore that cut on a sustained basis simply to get a moderate but sustained economic upturn.”