It is evident that over the last few months that the coalition has been leading a charmed life, although Nick Clegg may not agree. The economy has continued to recover and as the dollar and euro come under pressure, the pound appears to be performing well. Jobs have marginally increased and the scale of job losses in the public sector seems to be smaller than originally predicted. What is missing from this headline analysis is that it takes time for most government decisions to work their way into the system - six to twelve months is the minimum time for the spending decisions to impact on the economy.
The coalition policies were not set out until June in the budget statement and are still being brought to bear on the unsuspecting public. Public expenditure cuts will not begin to seriously bite until next April and the slow down in the economy will only begin to take effect when the many capital projects bestowed by the last government in its final Keynesian flourish are completed. With food and fuel inflation now accelerating, disposable income falling as pay is frozen and VAT increases about to take effect there will be a belated slow down in the economy. The goodwill that attends all new governments will have begun to tarnish and the opposition may have a more cogent story to tell than they have achieved so far whilst they have been indisposed by leadership elections and the systematic media trashing of Gordon Brown's tenure at Number 10.
The student protests this week have prompted many other groups to join the clammer of opposition to the coalition's policy of downsizing. In twelve months time we will have a better idea of what the coalition policies are achieving. Sadly, I suspect it will mean higher unemployment, more young people out of work, a stagnant housing market, no growth and the possibility of a double dip recession. No doubt there will be another tranche of money for the London Olympics and further inducements for schools to opt out and when things get bad the Prime Minister will set foot on the foreign stage in search of glory. Oh and the disarray in Europe will be blamed for the prolonged recession.
The coalition policies were not set out until June in the budget statement and are still being brought to bear on the unsuspecting public. Public expenditure cuts will not begin to seriously bite until next April and the slow down in the economy will only begin to take effect when the many capital projects bestowed by the last government in its final Keynesian flourish are completed. With food and fuel inflation now accelerating, disposable income falling as pay is frozen and VAT increases about to take effect there will be a belated slow down in the economy. The goodwill that attends all new governments will have begun to tarnish and the opposition may have a more cogent story to tell than they have achieved so far whilst they have been indisposed by leadership elections and the systematic media trashing of Gordon Brown's tenure at Number 10.
The student protests this week have prompted many other groups to join the clammer of opposition to the coalition's policy of downsizing. In twelve months time we will have a better idea of what the coalition policies are achieving. Sadly, I suspect it will mean higher unemployment, more young people out of work, a stagnant housing market, no growth and the possibility of a double dip recession. No doubt there will be another tranche of money for the London Olympics and further inducements for schools to opt out and when things get bad the Prime Minister will set foot on the foreign stage in search of glory. Oh and the disarray in Europe will be blamed for the prolonged recession.
No comments:
Post a Comment
thanks