Amidst continuing economic misery and the prospects of
further strike action, the Autumn report from George Osborne was quite the
focal point of the week inside parliament, no matter what happened throughout
the rest of the capital and the country.
With repeated promises of grand strategies and new hope, PM
David Cameron has made several hints in recent interviews that this would be an
announcement which would once again set Britain along the path to recovery and
financial stability.
As expected, the statement did little to improve positivity,
yet it is difficult to deduce how far there are failings in this report or its
predecessor.
Shadow chancellor, Ed Balls, reacted to the speech by
declaring Osborne’s plan was in tatters and concluded that it had been “a
colossal failure”. And whilst the announcements in the House of Commons were
far from a success, a colossal failure appears somewhat extreme a branding.
A shift in direction has been long overdue: and by employing
such a course of action, the current government may have been able to steer
clear of certain failings that are current plaguing the Eurozone dominated by
Merkozy.
Indeed, as expected and reported heavily on earlier in the
year, forecasts have shrunk and growth is expected to be minimal for the coming
two years (which is all the more concerning considering the Olympic Games
should provide a boost that is not at all evident in the statistics). Add to
this the fact that instead of reducing the deficit, the government is set to
borrow an extra £111bn over the course of four years: a projector that means it
will have spent more than Darling did previously.
However, it is difficult to condemn the move as liberally as
Balls challenged. Without a change in tact, there would have been serious risk
of falling into the Eurozone problems of cuts vs stability.
No doubt, the balance between the two is difficult to
attain, but this statement goes some way to redress the issue. Money has been
released for key areas of growth: infrastructures such as motorways, rail
systems and housing complexes all benefit as well as several key industries. The
idea is to promote growth that will outlive excessive government spending. By
starting the process, it is hoped a momentum of trade and commerce will begin
to build and the government can gradually ease spending.
So whilst this means a temporary boost in spending, it
remains the long term objective to reduce the deficit. It is interesting that
the government has now altered its plans so as they appear a mix of election
policies from Labour and the Conservative. Whilst the advocation of more
spending is present, there are still harsher cuts.
Whilst the Chancellor accepts that this method actually
means more pain now and more pain for longer, it appears that he has chosen
this revised plan because, in fact, it will move at a gradual and steady pace:
without sudden shifts, confidence will once again overwhelm markets as long as
they continue to show signs of future prosperity.
In his retorts, Mr Osborne pointed out that Labour is the
only mainstream party in Europe promoting spending extra money. Moreover, Mr
Balls’ statements appeared somewhat unfounded as he said the deficit was still
too high and yet more needed to be spent.
His comments, whilst sweeping, could in fact be a sign that
this is a move that could save the current government and win them an extra term
in office come 2015. There are certainly times of austerity ahead, but economic
collapse here seems slightly more distant than it does in centralised Europe… at
least for now.
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