Yes, the time has come to say ‘we told you so’ - a report card on the Coalition’s economic strategy

April 22nd 2012

STUC will release its report Yes, the time has come to say ‘we told you so’highlighting 6 economic claims which the Coalition Government got wrong.

On assuming office nearly two years ago, the Coalition Government exuded certainty and confidence in both its analysis of the economic challenges facing the country and the solutions it proposed. Immediate and deep cuts to public spending would, they argued, not only help rapidly consolidate the public finances; an investment boom in the hitherto ‘crowded out’ private sector would be unleashed. So far from jeopardising the nascent recovery, growth and jobs would increase. Coalition style austerity would also be fair, hitting the richest hardest and safeguarding the incomes of the lowest paid.

The STUC disagreed; we believed the decision to force rapid austerity on a weak economy was unnecessary and irresponsible. We argued that the lessons of economic history are unequivocal: when unemployment is high, the output gap large and interest rates already close to zero, public investment is required to grow the economy and get people back to work. Austerity would undermine recovery in the private sector directly through the loss of Government contracts and indirectly as jobs were lost and wages squeezed. Unemployment would remain higher for longer than necessary and the human, social and economic costs would weigh on society for decades. Society’s most vulnerable would be hit hardest as benefits and services were lost or cut.

Who was correct?

Has the burden of austerity been fairly shared and has it provoked a jobs rich private sector investment boom?

Or has the economy stagnated, leading to high and persistent unemployment and a rapid undermining of the living standards at the lower end of the income distribution?

ENDS

For further information contact Stephen Boyd 0141 337 8100

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