And, as Bernard Purcell reports in this week’s issue, the signs are getting increasingly dire. The Chancellor has been assailed during his summer sojourn in Beverly Hills with calls for a Plan B. It’s not so much a Plan B that Britain needs but a simple sign that the Government has any reasonable grip on the economy at all. As the Labour leader Ed Miliband has advised Mr Osborne, it’s time to forget the politics and concentrate on the economics.
Britain isn’t working. It is not a failure of economics but a failure of economic governance. At one end, the Government is ruining the lives of those in the firing line of cuts. At the other, it is doing the same as to individuals, companies and pension funds as billions are wiped off the value of the stock market. What began as a liquidity problem in Athens, a crisis that has sucked in Portugal, Spain, Ireland and Italy, has become a sovereign debt problem which, although it is on the periphery of the eurozone, threatens disastrous collateral damage to Britain.
In the eurozone, political leaders have dismayed the markets by agreeing a bailout plan several weeks ago, doing nothing to implement it and disappearing on holiday as though no one would notice that words are no substitute for action. In the United States, the political stand-off between the Democrats and the Tea Party-driven recklessness of the Republicans created a near stasis that resulted in the world’s economic powerhouse having its precious AAA credit rating deflated to AA-plus. That the non-elected, unaccountable and often wrong credit rating agencies are allowed to pronounce on the economic policies of sovereign governments which should be only accountable to their electorates is a major anomaly of Western democracy.
The overall picture gives rise to a perception that nobody is in charge apart from the capriciousness of volatile markets seeking reassurance that somebody actually is. The British Government’s economic policies are locked in the same obstinate stasis as the rest of the world’s – retrenchment, cuts and a self-denial of reality.
As Tribune has advocated since the start of the economic crisis, the Government should be prepared to stimulate the economy to create growth, through investment and, yes, more quantitative easing (printing money), if necessary. The alternative is continued low and falling growth. It’s not a Plan B. It is an essential and imperative new Plan A and it should include the abolition of the credit rating agencies’ right to comment on sovereign government policies.
