By Carl Hasty, Director of Smart Currency Business
Debate is raging about the value of austerity in Britain, and whether Chancellor Osborne's policies are helping or hindering the UK economy.
Last week's data showing the UK economy expanded by a larger than expected, yet still paltry, 0.3 per cent took some of the heat from fire burning within austerity critics, yet did little to change the course of the debate. Perhaps the pro and anti-austerity camps are both right — and both wrong.
As anyone in business knows, it is unsustainable to maintain larger outgoings than you have incoming monies. Yet, when trying to rebalance the budget during times of hardship, businesses know that improving efficiencies and reducing personnel costs are more productive to the survival of the business than cutting investment in profit-generating areas.
Perhaps the economy would benefit not from more spending, or less spending, but from a more targeted approach to cost-cutting. Infrastructure, like capital expenditure, is the catalyst for growth, so cutting this lifeblood could prove counter-productive. At the same time, reducing the public sector workforce and incentivising the private sector to increase employment could reduce the tax burden on small businesses and encourage spending.
By streamlining public spending on personnel and improving productivity, rather than simply activity, the Government could find itself more aligned with the successful SMEs which are keeping the economy afloat, and in doing so, steering the UK toward a more prosperous, sustainable future.
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