Thursday 18th April

And so, despite all the hoo-haa about Mrs. Thatcher, economics still matter.  The International Monetary Fund, a pretty conformist organisation has warned George Osborne that his policies are not working and that he should consider relaxing the rate of Austerity and spending more.

The economy was actually recovering in 2010 when the Tories came into power, and rather than take things slowly and really assess the position, they began to believe their own rhetoric and a sort of panic set in.  Rash decisions were taken and an economic plan that was inflexible and fixed for five years set in motion.  The result was that people became scared and stopped spending and the economy nose-dived.  The deficit has been reduced but most of this happened in the first year, and it is debatable whether there has been any improvement since.  Labour’s plan was to keep growth going and to reduce the deficit by slowly reducing spending while revenue would increase because of higher growth.

The truth is that George Osborne believes inherently that Public Spending is bad, and that the Private sector is good.  The deficit was just the excuse to cut back on the hated public sector, and he is so stubborn that despite the damage he has inflicted on the country he still believes he is right.   The sad thing is that even despite his policies – at some point, maybe later this year – things will start to improve and he will claim a somewhat belated victory.

Economics is like pulling a brick on a piece of elastic along a table top; nothing happens for ages and then the brick hits you smack in the eye.  Austerity isn’t working, therefore pile on more Austerity as we obviously weren’t Austere enough in the first place.