The Tories and their apologists would have you believe there is no alternative to the cuts. However, there is a great disagreement among economists; the consensus on the left, and with support from some classical economists, is that harsh cuts, far from being effective, actually made things worse – the case of Ireland, where rapid deflation has led to the brink of a sovereign debt crisis.
Mark Serwotka, of the PCS trade union argues:
“This barrage of cuts propaganda has disabled any critical thought. Cuts, large-scale public sector cuts, have become the accepted wisdom of our age. But this is not wisdom, it is dogma.
That’s why we have published a new pamphlet “There is an alternative: the case against cuts in public spending“. In it we show that there does not need to be a single penny taken away from a single public service, or a single job lost.
It is essential we expose the fraudulent argument that the economy will collapse unless public services suffer hundreds of thousands of job cuts, pensions are slashed and pay frozen. In fact, the opposite is true and there is a growing recognition of that among even establishment economists: attacking the public sector is more likely to cause a double-dip recession than to reduce the deficit.
If, as Osborne plans, we sack 600,000 public servants in the coming years that is 600,000 people with no income, on benefits – since few jobs are being created. They will spend less in the economy, which combined with cutting public capital spending, will have a knock-on effect in the private sector. Cutting 600,000 public sector jobs will lead to 700,000 private sector job losses. We know this, because the document telling Osborne this from his own Office for Budget Responsibility was leaked to The Guardian at the end of June.”
Figures released by the Office for National Statistics (ONS) today confirmed that the UK economy contracted in the fourth quarter of 2010. Real GDP shrank by 0.6 per cent – a little more than the 0.5 per cent decline that was originally reported. Economic activity in the UK appears to have been badly affected by December’s atrocious weather (more so than in the US and Germany, for example, where the weather was also terrible, but GDP increased by 0.8 per cent and 0.4 per cent respectively).
To learn more on why the cuts are the wrong approach to deficit reduction, see the False Economy website.