Earlier this week, it became
official that the UK was in a double dip recession; an announcement that had
been softened somewhat by previous data that suggested the UK economy had once
more begun to shrink.
Now there are calls for the
government to alter their course of action so as to encourage growth before the
new dive becomes irreversibly damaging to trade and economic prospects.
However, austerity measures
already in place took some time and considerable budget planning to come into
force and it is highly unlikely that a swift change of course will come by the
end of the month, or summer for that matter.
No, the government will cling to
a belief that whilst many other countries, both across Europe and the globe as
a whole, were reassessed and had their credit ratings slashed a few months ago,
Britain was spared in part thanks to these current policies.
It is no little truth. Of course,
the trend of growth, strength of the sterling and increasing import/exports all
had a swaying hand on the decision, but a key factor in the assessment process
is the perceived overall management of a country’s finances. Fiscal priorities
from Westminster over the past twenty-four months have been second to none and,
whilst the hard medicine approach has drawn parallels with the unpopular
measures of Thatcher, now (as then), there is still an overwhelming feeling of
support for the government as they remain resolute in their course of action.
Indeed, polls at the beginning of
the month, following the budget report indicated drops for the Conservative
party, but these were immediate back-lash reactions and not measured voices who
had considered the situation.
A situation that is, at best,
precarious. Sudden shifts in strategy could in fact damage the overall economic
efforts. Initial reaction to another statement of new measures would see
widespread panic throughout the City that would in turn spark a weakening pound
and a possible rush on banks.
Not to sound overly apocalyptic, but
the trust that the public and businesses place in government policy is a fine
balancing act. Even the slightest hint of disruption could threaten the
stability that has slowly ebbed its way back into consumer and business life.
Moreover, with Spanish
unemployment at a new high, continued Greek unrest, and further burdens on
Germany as AAA lone ranger of the Eurozone, the British need to put support
behind government efforts to consolidate progress so far achieved. With the
costly problems facing Europe, our markets need to continue to prosper, or else
both pound and euro will undoubtedly ride down the abyss together, so
inherently linked are the two zones.
Whilst the budget measures are
unpopular and few benefit from the changes, it would be unwise to declare the
policies as inappropriate and unsuitable to the current climate. The phrase
“we’re all in it together” still rings true in ears across the country: only in
a resolute front of support can businesses emerge from the staggering financial
crises and people become more liberal about their expenditure. Riots like last
summer show the potential fragmentation that lurks underneath our society, and
similar disruptions seen across mainland Europe in country’s with governments
weaker than our own are testament to the need for a straight and steady course,
perhaps even to protect us from ourselves.
