By Maximilian Clarke
The continued lacklustre performance of the UK economy- which has achieved an estimated 0.5% growth overt the past 9 months, has generated fiercely differing responses from commentators across the political spectrum.
Central to the debate is the issue of whether or not the Chancellor should adhere to his ‘hard and fast’ cuts agenda intended to stabilise the UK’s unsustainable budget deficit; or if, given the worsening condition of the world economy and the rock bottom domestic consumer confidence, the Coalition should ease off the cuts agenda in favour of a Plan B involving policies to nurture growth and restore confidence.
Trades unions have assumed the Plan B stance, fiercely criticising the chancellor for what they consider to be punitive economic policies enacted in pursuit of an ideological agenda at the cost of declining living standards and eternally squeezed living conditions among the UK’s most hard up.
“… this is economic self-harm,” said Trades union congress chief, Brenden Barber, commenting today (Tuesday) on the UK GDP figures. “The government's deep austerity programme has choked off what was always going to be a slow and difficult recovery.
“The government must listen to the growing demands for a Plan B that puts growth and fairness first.”
Opposing this argument are business organisations, including the Institute of Directors and, notably, the British Chambers of Commerce (BCC).
“It is right for the government to persevere with reducing the deficit, and calls for a Plan B are unjustified,” said BCC chief economist, David Kern. “But there is a clear need to reallocate priorities within the current spending envelope to support business growth.”
In October, Kern again defended the policy, saying “…we believe the fiscal strategy remains on course, and it is important for the government to persevere with the task of cutting the deficit and stabilising Britain’s public finances.“
By curbing public expenditure, the UK has retained its AAA credit rating, ensuring a lower cost of borrowing. This, argue deficit reduction advocates, is more beneficial to the economy than boosting consumer confidence or protecting public sector jobs.
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