It is hard to be optimistic about our economy at the moment, but if we want to shake the pervading gloom we have to do something about it. Economic growth will not come unless we make it.
Despite what the Chancellor says, Britain is not a “safe haven” and our economic situation requires urgent action now. This government will add more than £350bn to the national debt over the course of this Parliament. It will spend 50.1% of GDP over the course of this year. Cuts in government spending over the course of this Parliament will be at the rate of less than 1% per annum. Unless we see greater growth the deficit will not even be closed by 2015. Not cheering reading even before we consider the global context.
Chancellor George Osborne has claimed credit for putting Britain’s “house in order”. There should be no doubt that his approach of reducing government spending has been “vindicated”. Ed Balls’ failure in the House last Thursday to acknowledge the culpability of Labour’s high spending policies was almost laughable.
However, the government’s plans are only a start. There is much more that we can do. Talk of a radical agenda and plans must now turn to action. Last autumn we had a spending review; now is the time for the growth plan. At times like these there may be limits to what governments can do about sluggish growth but thankfully we are not entirely helpless. The time has come for radical reform of government and a reduction in its size, combined with radical supply side reforms.
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