What austerity?

By Thomas Pike

Observing from afar what is undoubtedly the biggest political debate of our era, you’d be forgiven for believing our Chancellor was worthy of a character from a 1970s Vietnam war film; machete in one hand, flamethrower in the other, slashing and scorching his way through the tangled jungle that is Britain’s fiscal disaster area.

Whether he is the goody or baddie rather depends on the director, be it either Craig Oliver, or Owen Jones, but there appears to be little argument over one fundamental conclusion. George Osborne is a man of austerity, responsible government spending, and the small state.

Indeed, this past week, Osborne’s plans for £11.5 billion of cuts have met with a mixed though predictable response. A few love them, many hate them, but the fundamental conclusion remains both assumed and unchallenged.

And yet this rather pleasant dream (or possibly petrifying nightmare) is just that; a figment of an over creative and reactionary media, lacking any grounding in reality. Why do I make such a bold point? Because, regrettably, it is the truth.

Let’s look at some just basic figures. When this government came to office, in 2010, the British state was spending £660 billion per year. £660 billion pounds which either came out of our pockets then, or later down the line, with interest.

After three years of ‘austerity’, ‘responsible spending’ and ‘the shrinking state’, that figure now sits at an estimated £715 billion. When the British people return to the ballot box in less than 100 weeks, that figure is expected to have risen again, to £728 billion.

But what about the deficit? We all know that’s been falling. Indeed, the deficit has been. It now stands at a mere 75% of what it was in 2010, even if borrowing marginally increased by £300 million between 2011/12.

Our debt? Well, after thirteen years of Blarite spinning, Brownite splurging, and the attempted suffocation of any problem under a veritable sea of banknotes, it stood at £760 billion in 2010. By contrast, when the John Major left Downing Street for the last time, it sat at around £350 billion. Eighteen years later, it is estimated to stand at over £1.35 trillion. Yes, that’s correct; our public debt will nigh on double under George Osborne.

In 2011, David Cameron’s message to the country and party was clear: “We have to understand that this is a debt crisis. It’s not a traditional, cyclical recession where you just turn on the money taps. You’ve got to deal with the debts; you’ve got to show the world you can pay for your debts as well as having a very strong growth strategy.”

No matter the increased spending, the increased debt, quantitative easing, and the stagnant growth and unemployment figures, Cameron did happen to make a good point. This is not a cyclical recession.

It is one which, despite being brought on by an unsustainable asset price bubble in the US, is ultimately the result of our oversized state over-encumbering the British economy. Like a heavily laden truck, we were able to make it down the slope behind us, but simply cannot move under our own power on the flat.

And thus, it follows that solutions to this cyclical recession will not solve the structural wounds which 13 years of socialism inflicted, and which five years of coalition politics seems hell-bent to continue.

If we wish to end these economic woes, we must seek a new strategy. A new paradigm of economic reasoning, away from the almost religious belief that problems in our economy can be solved with an ever larger, ever more intrusive, ever more bloated state. Because if we don’t, future generations, including our own, may pay a very dear price indeed.