Saturday, February 26, 2011


Expect a Bumpy Spring and Summer

The table on the left shows how the cuts will bite after April this year. So far it's been only a bit noisy- students, lecturers, a few trade unionists- but soon thousands of public sector jobs will go and unemployment will soar. Given the recent rapid rise in inflation and, (despite coalition promises to ringfence the NHS, £20bn cuts in its budget, child benefit frozen for three years and public sector salaries frozen for two years- I expect things to get much, much nastier.

The last quarter of 2010 registered a decline in GDP and the signs for this quarter are not good either. Usually revised figures reveal and upward direction but on this occasion the 0.5% shrinkage was increased to 0.6%. I notice that Gaddafi's awful ranting speech suggested the protest insurgency sweeping the Arab world, will spread north to European countries. It's hard to think what form this contagion might take as all these countries have democratic systems. The most that can happen, I would have thought, is that ordinary citizens, especially the young, might feel less inhibited from displaying discontent on the streets. Which would not please the Cameron-Clegg government overmuch.

The question those of us on the worried left of centre asks, however, is 'why is the Labour Party not making any impact with its critique? I will seek to address this topic in my next post.

The public spending cuts planned by the coalition only involve reversing, over five years, a small part of the enormous increase in expenditure which took place under Brown. In 1999-2000, government spending was £343bn. Had this merely moved in line with inflation, total expenditure would have reached £450bn in cash terms by 2009-10. Yet actual spending in that year had jumped to £669bn, an entirely unaffordable 53 per cent increase in real terms.
The emergency budget reduced real terms outlays from £697bn this year to £671bn in 2015-16. Remarkably, spending in real terms then will still be much higher than it was in 2008-09.

The numbers are telling. Total expenditure in nominal terms in 2008-09 was £630bn, £669bn in 2009-2010, going up to £697bn this year, £700bn in 2011-12, £711bn in 2012-13, £722bn in 2013-14, £737bn in 2014-15 and £757bn in 2015-16.

In every single year, spending goes up in cash terms. One half of public spending , (departmental expenditure limits ),will go up by 10% over the next 5 years, while the other half (annually managed expenditure ) will rise by 23%.
Any deviation from the growth is described as a cut by the two cheeks of the same arse (Graun & BBC, since you ask) & promulgated by their fellow travellers & the usual useful idiots.

Have a nice day !
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