The latest unemployment figures show that the UK has a growth and productivity problem, not a jobs problem. The economy has shown an ability to destroy and create jobs at an astonishing rate, as it has responded to the cutbacks in public sector employment and in retail. This is good news. It indicates that fiscal stimulus is not needed and would be undesirable. However, our growth and productivity problem, reflected in falling real wages and living standards, is serious. These problems cannot be solved by more government borrowing and spending. Indeed, in order to see the economy growing again, we must cut government spending from its current extremely high levels, reduce taxation and deregulate the economy. Unfortunately, in many key areas, the government is moving in precisely the opposite direction.
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