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BUDGET 2012: Growth Failure

(March 19, 2013)

Steve at Constituency Office

Tomorrow’s budget should be about one thing; how do we stimulate growth in the British economy?

I know that in Liverpool, our local economy will only grow when we have a Chancellor that shows a real commitment nationally to getting people back to work, getting the banks lending and tax breaks for businesses across the country.

The problem is, there isn’t much hope that George Osborne will see the error of his ways in tomorrow’s budget. In fact, since Osborne’s spending review in 2010, the UK economy has grown by just 0.7% compared to the 5.3% forecast at the time. That is a monumental difference in forecast and highlights unequivocally that his plan isn’t working.

When compared to our G20 partners, the UK currently finds itself in the relegation zone! We’re currently 18th out of the G20 countries in the growth league.

If you think that statistic is bad, then how about this. In 2012, despite spending a considerable chunk of the year in the global spotlight and welcoming international tourists to our shores for the Diamond Jubilee and the London Olympic Games, the UK went through a double-dip recession and the economy shrank by 0.3% in the last quarter. No growth whatsoever.

And there is a worrying trend developing. Every time the chancellor comes to the House of Commons, his growth forecasts are down and his borrowing projections are up. To highlight just how off target the chancellor has been with his growth forecasts, check out the table below. Growth in 2013 was expected to be 2.9%. Now it is expected to be 1.2%. Even that is wholly optimistic.

GDP growth (%)

2011

2012

2013

2014

2015

2016

June 2010 Budget OBR forecast

2.3

2.8

2.9

2.7

2.7

n/a

Latest OBR forecast

0.9

-0.1

1.2

2.0

2.3

2.7

 

The result of this Government failure is that the economy has flatlined, inflation has risen and wages have decreased since Cameron and Clegg held their first rendezvous in the Rose Garden.   

Additionally, a lack of growth has meant more borrowing to pay for the costs of economic failure – with borrowing forecast to be over £212bn more than planned at the time of the spending review.

It means that Cameron’s promise to “balance the books” by 2015 will have been broken. (Another to add to the list alongside the VAT rise, Sure Start, EMA, NHS reorganisation…)

And the national debt as a percentage of GDP is not now forecast to start falling until 2016/17 – breaking one of the government’s fiscal rules.

Failure. That is the only word for the last three years of tax and spend commitments. For the sake of thousands of people in Liverpool Walton, I only hope that tomorrow Osborne has learned the lessons of recent history and vows never to repeat the

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