Wednesday, 4 December 2013

Osborne`s Autumn Statement

Chris Huhne has made some valid points about the Tories` election plan, especially the idea of stealing " Labour`s lollipops" and the need for the chancellor in his Autumn Statement to "deliver growth".However, whilst indeed Osborne`s "tone will not be triumphalist", the real reason will be that the small economic recovery now underway is not the result of his austerity policies; business investment has fallen by 6% this year, exports have not risen and manufacturing output is 9% lower than in 2008. His Plan A failed to kickstart the economy, his Funding for Lending scheme, giving access to banks to very cheap money yet again, on top of the £375bn of quantitative easing, was originally intended to benefit small and medium sized businesses until it was hi-jacked by the greedy buy-to-rent brigade. It lasted so long unchecked because it resulted in low mortgage rates and house price rises, and their hoped-for accompaniment, a pre-election feel-good factor. The truth is the Tories have been banking on no interference from the Bank of England, and the continuation of low interest rates, until the election, so we can expect yet more emphasis on "efficiency", on Thursday, not only to keep the financial sector on board, but because in Tory-speak, this means job losses, and lower unemployment figures would trigger the Bank of England to raise interest rates.
The failure of his policies will not prevent Osborne from claiming otherwise; the Tories` "economy with the truth" is reaching legendary status, and the chancellor, on the trail blazed by Gove, Duncan Smith and Hunt, will conveniently fail to mention the Keynesian aspect of his financial interference. Government action taken to reduce tax avoidance will be lauded, despite the lamentable General Anti-Abuse Rule raising only a fraction of one percent of the £25bn lost annually. Labour should be prepared for all of this, and get their "retaliation in first", making pledges to raise both the minimum wage and tax-free allowance levels, to introduce a progressive system of income tax and a cap on all private rents, with a commission on the rental system to follow. Obfuscation and prevarication must be avoided, as clearly the Autumn Statement`s purpose is electoral rather than economic.


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