By Joshua Rowlands
The Conservative plans for deep spending cuts were greeted with a vicious uproar from the Labour Party and indeed much of the population upon its initiation in 2010. The Shadow Chancellor of the time Alan Johnson insisted that severe spending cuts would cause a double dip recession and should be reversed. This attitude has persistently lingered within the Labour Party; cuts should be abandoned; the government should borrow more. Just today [11.08.13] John Prescott has launched a scathing attack on the Conservatives pre-1997 housing policies, demanding that they caused the bedroom tax of today. However, as the economy begins to pick up, as jobs are being created and as the budget deficit decreases, have the Conservatives got it right?
Those arguing no point towards the agonisingly slow pace at which the economy seems to be moving. But, growth is growth right? The Conservatives inherited a battered and bruised economy, with a seemingly downward spiral ahead of it. The crisis in the eurozone failed to help matters and yet the gears and cogs of the economy have begun to rotate. The British economy grew by 0.6% in the three months to June, with output increasing in manufacturing, agriculture and services according to OSN. The economy has regained around 4% of the 7.2% of output lost in 2008-9. Of course, these figures have to be consumed with a pinch of salt. A growth rate of 0.6% is nothing to shout about. But given the state of Europe, particularly looking towards the dire state Spain is moving into, it is more than adequate.
Furthermore, the deficit has been reduced by a third, the unemployment rate fell by 0.2% to 7.8% with 57,000 people finding employment in the months of March, April and May and people claiming jobseekers allowance fell by 21,000 in June. There are more people employed in the private sector than ever before and over 300,000 new small businesses have emerged. The countries borrowing costs have been significantly reduced, and in a geopolitical system that has been dependent on borrowing over the last ten years, this is a significant achievement.
Figures published on Tuesday [6/8/2013] suggest that car sales and house prices were gently rising with some analysts predicting growth to further increase. Similarly, the new Governor of the Bank of England has stated that interest rates will remain at their record low levels for the foreseeable future; a further boost to the housing sector. It very much appears as though the economy is awakening from its dismal coma that it has been locked in for years. This must be attributed to the Conservative Party surely?
Boris Johnson declared that the economy was “coming right” and that the Conservatives were on a “glide path” to the next election.
However, with real incomes, adjusted by inflation, yet to reach pre- recession levels, George Osborne and the Conservatives realise there is much still to be done. Indeed, there are still large cuts and schemes to be rolled into the playing field. Recent studies show that British workers have suffered a 5.5% drop in wages since 2010, some of the worst levels in Europe. The shadow Treasury secretary, Ms Jamieson, has attacked Cameron and his government for causing this catastrophic decline. Osborne, however, will stick to his guns and is confident that the 0.6% growth in the three months to June will be reflected in increased wages by the election of 2015.