Wednesday, 30 June 2010

Funny how ...

... quickly the painless cutting of flabby state spending that the Tories were promising turned into a frenzied assault on the poor and vulnerable with a chainsaw.

1.3 million jobs are expected to go over 5 years as a result of George Osborne's 'emergency' budget cuts, according to forecasts the Chancellor somehow forgot to include in his budget. Osborne HOPES that the private sector will expand at a faster rate, and more than compensate for the public sector losses - but business confidence seems to be on the way down. And if people are too scared to invest, where are these jobs going to come from?

Oh, and if you're still lucky enough to have a job, you'll find your wages don't rise as there is suddenly a reserve army of labour waiting to fill it for you ... and, meanwhile, VAT driven inflation increases diminish your wages in real terms:
Unpublished estimates of the impact of the biggest squeeze on public spending since the second world war show that the government is expecting between 500,000 and 600,000 jobs to go in the public sector and between 600,000 and 700,000 to disappear in the private sector by 2015.

The chancellor gave no hint last week about the likely effect of his emergency measures on the labour market, although he would have had access to the forecasts traditionally prepared for ministers and senior civil servants in the days leading up to a budget or pre-budget report.

A slide from the final version of a presentation for last week's budget, seen by the Guardian, says: "100-120,000 public sector jobs and 120-140,000 private sector jobs assumed to be lost per annum for five years through cuts."

The job losses in the public sector will result from the 25% inflation-adjusted reduction in Whitehall spending over the next five years, while the private sector will be affected both through the loss of government contracts and from the knock-on impact of lower public spending.

The Treasury is assuming that growth in the private sector will create 2.5m jobs in the next five years to compensate for the spending squeeze. Osborne said in last week's speech that tackling Britain's record peacetime budget deficit would help keep interest rates low and boost job creation. "Some have suggested that there is a choice between dealing with our debts and going for growth. That is a false choice." However, investors are increasingly nervous about the lack of growth in the world economy. The FTSE 100 fell more than 3% yesterday as fresh jitters hit confidence. (1)
It's much more likely that 1.3 million jobs will go than 2.5 million new jobs will be created. The 1.3 million will go regardless, because Osborne has cut the funding for them. The 2.5 million might appear if the economy starts to grow strongly and there is lots of investment. Which won't happen if the economy slips back into recession - which is still likely, and possibly more likely because of the punitive spending cuts, increase in the number of jobless and the reckless effort to reduce debt and deficit.

Welcome to Cameron's Collapsed eConomy. Not as snappy as Brown's Broken Britain, but that's what you get in this ConDemNation - second best and shoddy.
1 - "Budget will cost 1.3m jobs - Treasury," by Larry Elliot. Published in The Guardian, 29th of June, 2010. (http://www.guardian.co.uk/uk/2010/jun/29/budget-job-losses-unemployment-austerity)

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