Autumn Statement Readjusts Economic Vision.

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. 

George Osborne's report at a glance (BBC)

  

I (Do Not) Agree With Nick: The Latest Economy Stance.

Amidst continuing financial woes, Deputy Prime Minister Nick Clegg stated earlier today that the government will not change course on spending cuts.

Of course, the long mocked slogan ‘I agree with Nick’ from the previous electoral campaign rings ever more true, as the Lib Dem defence of the cuts outlines how far they have backed from original party politics in order to hang on to the coattails of power.

Despite declaring that his party would stand up for themselves more openly in May, Clegg has reiterated that the cuts will continue as projected, amongst growing concerns of a double dip recession.

Following moves from the International Monetary Fund (IMF) earlier this week, there are rumours that £5bn could be released to deal with boosting economy infrastructure. Within the past few days, the IMF cut its growth forecast for the British economy not only for 2011 but subsequently for 2012 too, despite the prospect of being the Olympic host. In addition, the organisation said the government should delay its deficit reduction programme if growth slowed further, or risk loss of consumer confidence and a deeper recession.

Ministers pushing for such a move believe it would not be seen as a U-turn as the money would be capital spending, on infrastructure projects like roads, rail and broadband, rather than current spending.

However, Nick Clegg insists that the ruling coalition is not about to alter the course of its plans over any of the concerns. It is thought that such a move would again raise eyebrows and threaten already stalling growth figures.

Of course, this is not likely to help Clegg’s tumbling popularity figures, which in turn could lead to a situation by which the nation would want to ratify a different route of recovery.

In the wake of the widespread riots that overran various UK cities last month, there was a perceived understanding that the government would alter several of its policies in response to such an unpredicted outcry of sentiment. Whilst various reasons have been attributed to the sudden unleashing of fervour, one of the most resounding put forward is that many people believe that they have little money and little leisure time and space, whilst a capitalist economy boasts the many luxuries that are outside swaths of Britons’ pockets.

Remembering a time when election politics foretold a riot if Tory cuts were implemented, it seems as if Clegg has not fully appreciated the wisdom of his own words.

Yet in spite of such scenes, Clegg presents the recovery as it stands as “the right thing, not the easy thing”.

It appears that it is a game of nerve and cheek. Reflecting on the economy as ‘a game’ firstly is not going to install any confidence. But it would seem that here lies the government’s wish that the city hold firm in the face of probing questions and concerns over the state of finances in Italy and Greece.

The aim is to continue with the outlined plans so as to “build a new economy. An economy for the whole nation.”

However, Clegg’s bravado does not muster the same feeling of unity that it did in May 2010. Such idealistic views are no longer heeded with the same anticipation and there remains a great unease that this latest government has made little headway into resolving the deficit crisis over its 16 months in Westminster.

Cries of ‘I agree with Nick’ are now few and far between.