Recently we have had a seemingly never ending succession of bad news about the UK economy. All the indicators and forecasts suggest that we are in for a very bumpy ride ahead. If we are not in recession we are pretty close to it. It also seems that our national debt is getting bigger not smaller. Now all this is bad news for our nasty Coalition and the Chancellor in particular. So he and his chums in the media have taken to blaming the crisis in the Eurozone for our troubles. If only these fickle foreigners would get their act together then everything would be fine and dandy over here.
No matter how loudly and how often this line is repeated it remains untrue, and as near a lie as one can get. Even the IMF, that bastion of fiscal austerity has challenged the government’s li(n)e. According to their latest report on Europe, the reason the UK has experienced a large build up in public debt is because of the costs of the large loss of output following the crisis. And of course this large loss of output is directly down to decisions taken by one George Osborne. Raising VAT, freezing public sector wages, reducing welfare payments and engineering a large rise in unemployment through cuts in the public services can only have one outcome - a severe reduction in demand leading to a large loss of output. Not quite the story of public sector profligacy the government is usually so keen to tell.
The recent forecasts for the economy are also very revealing about the true source of our economic woes. Not only do they agree that there is likely to be substantially less growth in the economy overall - down from 2% to 1%, but the source of this anemic growth has changed. More details here. Forecasters now expect domestic demand to subtract 0.4% from the economy as consumers, business and government all cut back whilst they expect net trade to add 1.3%, much more than previously. So despite the Eurozone crisis our exports are likely to hold up. What this means of course is that our continued economic woes are all down to Osborne himself and his misguided policies. Time to stop trying to blame someone else.