London Occupy Economics Working Group (EWG) budget response – “a missed opportunity”
The current financial crises (Eurozone, US and UK public and private sector debt, banks’ insolvency) were precipitated by the sub-prime mortgage crisis of 2008 which was the culmination of a housing fuelled, economic boom in the US, UK and Europe (particularly Spain and Ireland). Rising house prices fuelled an explosion in consumer credit and private sector debt. When the US housing market collapsed, the resulting tax-payer funded bank bailouts created burgeoning government debt in the UK, US and Eurozone.
This budget is seeking to recoup the cost of the banking crisis by reigniting a debt-fuelled housing boom and continues to place the heaviest burden on the most vulnerable in our society who neither contributed to the housing and consumer boom, nor benefited from it.
This budget was a lost opportunity to invest heavily in Council housing as advocated by the EWG in its paper presented to Downing Street last summer. Investment in public housing would stimulate growth and solve the current housing crisis without storing up yet more bank debt in housing and consumer finance. It would also have been an opportunity to introduce a location value charge to share the value created communally but currently accumulated by land owners.
Independent analysis suggests borrowing is not falling and as on every occasion previously, the Chancellor’s projections are optimistic not least because they fail to take account of the global context which George Osborne uses to explain why previous targets were missed.
The giveaways in the budget such as rises in the Personal Allowance will be welcomed and go part-way to mitigate the worst effects of rising inflation and reducing incomes for many. But the growing underclass (pensioners, the unemployed, disabled, and those in part time work or on the minimum wage supplemented by benefits) continue to pay the costs for the failures of the property based, financial system which brought us the crisis.
Meanwhile, tax cuts will benefit the wealthy while inequality continues to rise as the richest in society grab an ever growing share of the nation’s wealth. The Spirit Level by Wilkinson and Pickett shows how inequality is bad for everyone in society not just the poorest.
Mike of the EWG said, “This is a continuation of austerity, which does not reduce debt but increases it!! The government knows this but pretends it does not for the secret agenda is all about pricing the 99% into work!!” The Chancellor endorsed international trade agreements as a means to boost growth whereas in reality they will drive down wages further, thereby reducing consumption and consequently growth.
On a day when unemployment hit 2.52 million with a million aged between 16 and 24 unemployed (21.2%), this is hardly a budget for the young and future generations who pay the price of economic mismanagement by a complacent, misguided elite.