Saturday 9th December
Bill Clinton appropriated that phrase and won an election with it possibly. And now, even though the news is about murdered actresses or bad weather it is still the economy, stupid. You may not have noticed but 2016 has seen major turbulence already, shares crashing in China and to a lesser degree over here, the price of oil slipping yet again, the pound also falling against the dollar. But as usual what we hear is so much more about presentation rather than fact.
The Chancellor stood up only just over a month ago with a beaming face and declared that things were actually looking rosier than he thought and there was actually no need to cut Family Tax Credits after all (if you remember he was defeated over this in the house of Lords). But actually things are really not rosy at all. Unless there is a major turn-around from now until April he will have actually increased the deficit this year as he is running about 6 billion pounds behind last year already. In fact far from paying down the debt, he has added almost one trillion to our National Debt in the last six years. He came in promising to get rid of the deficit in five years (and suckering the Lib-Dems in with this promise too) but has gradually let that timetable slip until 2020. Incidentally Labour in 2010 had said exactly that, that they would take ten years to wipe out the deficit but were laughed out of court by Osborne who said that was economic madness. Anyway, just like other lies that it was Labour overspending that created the Financial Crash of 2008 the truth seems to matter little and the news media go along with his version of events.
But his recent optimism will surely be changed when he presents his budget in March. We can expect even more cuts in spending and maybe more tax cuts for the already wealthy. Because you see it is all political decisions. The deficit is caused because spending (though reducing) still exceeds income, and Osborne has been happy to cut both spending and taxes. And his real problem is that despite the economy growing a bit tax revenues are actually falling, and this after VAT went up in 2010 too. And the country is deeper in debt than ever. Personal debt (which many observers saw as the underlying cause of the 2008 crash) is also higher than before the crash as wages have fallen in real terms too. We would have been in a much better situation by increasing taxes slightly six years ago and holding spending steady. And interest rates are sure to start going up soon…
Expect more trouble ahead.