The key point to remember from Osborne’s Autumn Statement today


by Sunny Hundal    
9:01 am - December 5th 2012

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Today George Osborne delivers his Autumn Statement on the state of the British economy. It should come as no shock to anyone that it is in dire straits.

So it is likely the Chancellor is keeping something major up his sleeve to grab everyone’s attention and make it the main media narrative. Keep an eye out for it.

Of course, some announcements are already expected and have been briefed in advance. There will very likely be cuts to welfare spending despite Libdems claims they’re against it. Osborne will also mention an increase in gas exploration and gas power stations and more money for transport and other infrastructure spending.

There will also be the pretence that ‘we are all in this together‘ by announcing minor new taxes or a supposed crackdown on tax avoidance. The Financial Times (registration) have a handy ten point primer for other announcements.

But here is the key point. Osborne said in the 2010 Budget: “Unless we deal with our debts, there will be no growth”. Today will reveal he’s failed hugely on both counts.

Here were his two fiscal rules then:

1. To achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period

2. Public sector net debt as a percentage of GDP to be falling at the fixed date of 2015-16

On both counts Osborne has fallen behind because the economy is growing much slower than expected thanks to austerity. That isn’t me making a partisan point – that is a statement of fact.

The IMF looked into the government’s spending plans recently and said that the Treasury had expected the impact (multiplier effect) of cuts to be around 0.5. I.e., a £10bn cut in spending would reduce GDP by around £5bn. But it estimated the multiplier was actually between 0.9 and 1.7 – so much more money was sucked out of the economy than expected and it contracted.

The Left has been arguing this for over 2 years. David Blanchflower even predicted a double-dip recession and right-wingers ridiculed him.

Two and a half years after the Conservatives took over the reins of the economy, today’s Autumn Statement will mostly illustrate how badly they have failed even at the tasks they set themselves.

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Reader comments


1. gastro george

Hopefully the final nail in the coffin of “expansionary fiscal contraction”.

“David Blanchflower even predicted a double-dip recession and right-wingers ridiculed him.”

Mostly because he’s been wrong about pretty much everything else.

3. gastro george

“Mostly because he’s been wrong about pretty much everything else.”

Because right-wingers have, like, such a good record …

2. Tyler

“Mostly because he’s been wrong about pretty much everything else.”

No he hasn’t.

Unlike the catastrophically wrong right wing.

Go away and say nothing until you admit how wrong your side has been.

George Osborne has never studied economics in his life. He did not even bother to take a crash course in economics before or after his best buddy David Cameron gave him the vitally important job as Chancellor of The Exchequer dealing with the enormous responsibility of dealing with the British Economy.

Before and during the 2010 general election George Osborne and David Cameron fooled the entire nation into believing that they had it all worked out with a Tangible plan of deficit reduction plan along with their austerity measures that did not even require a rise in Value Added Tax. Within two weeks of getting into Government and becoming Chancellor of The Exchequer George Osborne then decided to raise VAT.

This entire country has been conned and taken for a ride by a bunch of chancers that have no previous experience in economics. In fact it is becoming blatantly obvious that they do not have a clue.

When there is a worldwide financial crisis you would have thought that people with hands on experience would NOW be needed as the economy is one of the most important matters for any country.

Time for change and when George Osborne was Booooooed at the Olympics I would have thought it was time for him to move on, but this Government under David Cameron Don’t Get It !

What A Diabolical Disgrace.

The writing is on the walls !

“That isn’t me making a partisan point”

Heh. Very droll.

“that is a statement of fact.”

Well, it’s based on the interpretation of estimates, so no, basically, it isn’t. And in any case the implication that it’s wholly down to UK austerity (/’austerity’) and in no way connected to – for example – the effects of the fatuous EZ straitjacket on UK export markets, is straightforwardly wrong.

“The IMF looked into the government’s spending plans recently and said that the Treasury had expected the impact (multiplier effect) of cuts to be around 0.5. I.e., a £10bn cut in spending would reduce GDP by around £5bn. But it estimated the multiplier was actually between 0.9 and 1.7 – so much more money was sucked out of the economy than expected and it contracted.”

Dear me.

1) The initial estimates were the IMF’s own.

2) The revised estimates were based on a rather arbitrary basket of countries, some of them with features generally accepted to reduce multipliers, such a trading economy and a floating currency – eg the UK – and others without – eg Greece. (And in any case some observers have pointed out that the neat best fit rather collapses if outliers like Greece and Germany are ditched, or a different mix of states used, or the time period altered…).

“The Left has been arguing this for over 2 years”

Arguing what, exactly? And it’s not clear who you mean by ‘The Left’ here, care to elaborate? Clearly not the Brown/Darling combo. (Thatcher / deeper / cuts, remember?) Maybe you’re making a subtle point about tax take / capital / revenue spend. Or maybe not.

Of course, all this is anyway posited on the assumption that we’ve actually had fiscal austerity. And the numbers don’t really help you here, do they?

Can I just say that I agree that Mr Osborne is up there on the wall of shame as one of the worst CotE in history. He ought to do us all a favour and go back to folding towels in Selfridges.

” On both counts Osborne has fallen behind because the economy is growing much slower than expected thanks to austerity. That isn’t me making a partisan point – that is a statement of fact. ”

However, you can’t make this true without engaging in the partisanship of blaming everything on the government in power. There is no model Keynesian or other where it is true. Maybe at a stretch 40% of the difference where the economy is and where it could have been can be blamed on government austerity. So you are making a not very plausible partisan point. The coalition government economic policies are useless, but they are useless because they are ineffectual not because of austerity.

If we wait long enough we might get an ex Goldman Sachs fella in, I hear that’s a popular measure in Europe…

£200 billion more spent than expected! He is a disaster and should be sacked!

He must be the most hated Chancellor we have ever had.


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  2. Sunny Hundal

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  3. Roy Ellor

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  4. MerseyMal

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  5. DJS

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  7. Robin Macfarlane

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  9. Dominic Campbell

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