Public spending cuts – a phrase we have heard all too much in recent months. But despite the name recognition nobody really seems to understand what it means, and this is not just restricted to the voters. Even politicians seem to struggle to pin down what form they will take.
The deficit currently stands at over £820bn and anyone who has ever struggled to pay of a mortgage, loan or bank overdraft will tell you it is impossible to continue running with debts of such magnitude.
However, as anyone who has lost their job in the last twelve months will tell you, we cannot afford to risk the economic recovery.
So what is the best way to reduce the deficit without risking the dreaded double-dip recession?
As you are doubt aware the major difference between the parties is not if but when to switch of the life-support. Labour believes the recovery should come first, securing our economic recovery before focusing on the repercussions of massive national debt. The conservatives on the other hand want to rip-off the bandage to show foreign investors how serious Britain is about our economic future.
Despite objections from the other side of the chamber keeping public spending up has helped this country get through the downturn, a tactic used by Franklin Roosevelt after the great depression. However as David Cameron regularly points out Gordon Brown has appeared to be asleep at the switch when it comes to reducing the debt.
Mr Brown has called for a 50% reduction during the next parliament, while Mr Cameron has called for a much larger reduction, although he has refused to be specific.
The Tory leaders view is much more in line with Bank of England chairman Mervyn King, who has regularly called for spending cuts to completely remove the deficit in four years.
Unfortunately for Messer’s Cameron and King anyone with vague socialist tendencies will point out the conservatives objected to the bank bail-outs, 50p tax rate and sustained levels of public spending, all of which played a vital part in Britain’s tentative recovery.
However what political and fiscal conservatives will tell you is an economy needs investors and entrepreneurs to grow, and with such large national debt the UK is far from the most attractive investment market at this time. Government does not create jobs, business does.
Both have so far called for public sector pay-freezes which although making a start on deficit reduction is comparable to sending soldiers to Afghanistan with an air rifle.
Both have pledged not to cut NHS funding in the aftermath of the American health-care debate, while cutting military funding or homeland security would be politically suicidal.
So with nobody willing to commit themselves what are the alternatives?
Tax rises – The human mind is not capable of understanding how incredibly unpopular this notion would be, especially in the run-up to Christmas and stories of bank bonuses (tax-free by the way) already on the return.
Right wingers normally campaign on the opposite in fact, but even Mr Cameron has been forced to admit the 50p rate on incomes over £150,000 cannot be removed instantly by a new conservative government.
A popular notion is to reduce inefficiency rather than actually cutting spending.
London Mayor Boris Johnson has already claimed he can save Transport for London £5bn without effecting services through streamlining the existing framework, although doubts over these claims have subsequently arrived.
The major problem is none of the major parties seems prepared to give any details. Each tied up in a high-stakes game of poker, keeping their card close to their chests.
It is hard to blame them. The stakes are not just high but massive.
Either Gordon Brown or David Cameron will travel to Buckingham Palace next year and be asked to form a government whose almost sole task is to restore economic growth and reduce the deficit while fighting what is seen by many as an unwinnable and expensive war in Afghanistan.
Unfortunately for them it appears details are what people want now. Public sector pay freezes as we know barely make a dent in the deficit and businesses want to know what the government is going to do next before risking their futures investing in Britain.
The average person wants to know if a Tory government is elected will we go back to the days of underfunded public transport, hospitals and schools, while at the same time wanting to know if we re-elect Labour will the deficit continue to grow at a rate which predicts a £1.1tn deficit by 2011.
All this while economic recovery is threatened by a collapse in stock prices in Dubai.
Come the New Year all parties will be climbing over each other to announce what will be cut when and where. However fears remain that politicising this issue may be doing more harm than good with a new government looking for the short-term fix rather than the examining the long-term consequences.
No comments:
Post a Comment