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A specious speech

MICHAEL MEACHER explains why Osborne's boasts of economic 'growth' are just so much hot air

Almost all the boastful statements made by George Osborne in last week's autumn statement were specious or ill-founded.

He kept repeating - always a sign in a politician that they don't really believe it either - that he'd always had a long-term plan.

His plan was always to squeeze the public sector in order to release the pent-up but crowded-out energies of the private sector into a surge of self-sustained growth.

The opposite has happened.

The public sector is certainly squeezed - with highly damaging effects on the private sector which depends on the public sector for 40 per cent of its custom - but private-sector investment remains flat as a pancake.

He claimed he had earned the recovery by sticking painfully - though not for his class - to austerity.

The truth is the reverse. The recovery, such as it is, derives from renewed consumer borrowing (household debt is now creeping up again to the very dangerous level of £1.4 trillion), helped by interest rates flat on the floor, together with the wrong-headed help-to-buy bribe.

Austerity has played a role, certainly. It has postponed the recovery, drastically weakened the economy and imposed enormous yet unnecessary pain on the lower half of the population, but it has not generated an ounce of growth.

Osborne then repeatedly boasted that the government was on course in reducing the budget deficit, and he then had the gall to announce that by 2018 the budget would be in surplus.

By any reasonable standards of assessment that is an absurd fiction.

The truth is that the deficit is being reduced at a snail's pace. In 2011 it was £118bn, in 2012 it was £115bn and this year it is expected to be £111bn.

At that rate it will take more than 25 years to pay it off. To pretend that that is politically realistic is ridiculous.

Osborne quoted figures from the Office for Budget Responsibility all the way to 2017 to show that the economy is at last genuinely taking off, but OBR predictions have been notoriously optimistic in the past.

Even more to the point, are the foundations for sustainable growth in place?

They are most certainly not. Business investment is still 25 per cent below pre-crash levels, UK productivity is one of the lowest in the Organisation for Economic Co-operation, real wages have already fallen 7 per cent and are still falling, exports, despite a 25 per cent fall in the exchange rate over the last five years, have still not taken off and the deficit on traded goods this year is still likely to be in excess of £100bn a year.

So where is the demand going to come from?

Osborne's triumphalism is the elevation of partisan politics over sound economics.

Will consumer borrowing continue to advance if austerity and falling real wages continue till 2018, as Osborne promises?

How can exports recover when the pound, perversely, is actually rising to its highest level in five years?

And how can living standards, on which so many elections in the past have hinged, if wages, productivity, investment and exports are all falling?

 

 

Labour needs to speak up onthe super-rich

 

Why is Labour so quiet about the super-rich, those on more than £3,000 a week? And why is it so timid about the ultra-rich, the FTSE 100 bosses who now average $4 million a year remuneration or, to put in more readily used terms, £86,000 a week?

There are three good reasons why Labour should open up a major broadside against the very rich and the stratospheric rich.

First is that it would be very popular. The public hostility towards the bankers and their multimillion bonuses and the visceral hatred felt towards the greedy profiteering of the big six energy companies are an open invitation to Labour to go on the attack relentlessly and persistently - not just because it would be popular but because it's right.

There is no justification for these obscene levels of pay and remuneration. It has nothing to do with the national interest, it is no reflection of merit - it is simply a reflection of their power in the marketplace and their insatiable self-interest.

That's why the public hates them so much and why they offer such a tempting target to Labour on moral and ethical grounds and not just for funding reasons.

The second reason was spelt out forcibly by David Cameron in the Guildhall last month and by George Osborne in the Commons last week.

Cameron told the assembled plutocrats that the Tories intended to shrink the state indefinitely and the autumn statement put immediate flesh on that by announcing that they would put an arbitrary - but low, and maybe steadily reducing - cap on benefit into statute.

The Tories have already put caps on housing benefit, leading to social cleansing, and on the social fund, the last resort for those in desperate need. Now they're extending it across the board.

Just as Thatcher and Blair's neoliberal capitalism - "let the market rule untrammelled" - has hugely boosted inequality in the economy, the Tories are now forcing through similar measures in society.

And the only way to stop them is to take them on where their strength centrally lies - a government of the rich, by the rich and for the rich.

The third reason is that in the last analysis this isn't about riches, it's about power.

The super-rich are where they are not because they're worth it, not because Britain needs them, but because they've secured a key alliance between money and power.

Their economic system, the deregulated capitalism of the last three decades, has effortlessly increased their own assets, diminished the wage share and weakened Labour's capacity to resist through the trade unions.

Thatcher took on Labour's power, first the miners and then at Wapping, and even now the current Lobbying Bill is still trying to undermine the forces of the left.

The Tories know what they're about and are going for it full-tilt.

Until Labour does the same, goes for the very wealthy and their seizure of governance, Labour may win the election but it won't win real power.

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