UK Cuts Must Continue

George Osborne, the UK Chancellor, has stated that cuts to spending must continue if the government is to remain credibility and trusted by the people. However, not everyone agrees with the continued cutting of spending such as the chief economist of the International Monetary Fund, Olivier Blanchard.

Mr Osborne said pension, education and welfare reform was helping to make the UK a more competitive economy, while cuts to corporation tax and higher-rate tax were making the country a more attractive place to do business. Such reforms would make the British economy “a winner in the global competitive race”, he said, citing sectors such as aerospace, pharmaceuticals, financial services and the creative industries as “world beaters”.

However, these cuts must continue until 2017 according to Osborne if the UK is “to continue moving in the right direction”.

Thanks for reading. What are your views on these ‘tactics’ by the British government?

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6 comments on “UK Cuts Must Continue

  1. illero says:

    Sounds like what many of us wanted the U.S. to start doing a few years ago. Hard to make this happen with the big spenders we have in office now.

  2. Austerity measures drove the UK and Eurozone back into recession last year (see: http://www.bbc.co.uk/news/business-20337245). Keynesian or not, the fact remains that these policies reduce consumer demand and restrict economic growth. Any credible economist worth their salt knows this.

    The financial crisis that resulted in the worldwide Great Recession of 2008 was not caused by government overspending (although that did occur). It was caused by greedy and corrupt business practices by banking institutions whose power and influence had grown beyond regulatory constraints and oversight.

    Now, these very same interests – who still sit atop our plutocratic and corporatist structure – are ignoring their own culpability and pushing for even more middle class austerity under the guise of “fiscal responsibility.” Lowering the income potential of UK workers down to the level of third-world peasantry is not prosperity. Rather, it is a dystopian vision of a world where global commercial forces circumvent and emasculate autonomous governance for their own purpose.

    • Sonia K says:

      The corrupt practices of business back in 2008 succeeded because they created an inflated consumer demand. That plus the government over sight in spending caused the break in regulation. Controlling demand and FDIs are a way to balance the problem of economy. Depending on how strong an impact FDIs have in UK – the balance will dip in favour or against UK.

      • The “inflated” (artificial) demand in the housing market did not cause regulatory negligence, it was the reverse. I’m unsure what you meant by “government over sight in spending,” so I can’t address that point.

        Regarding FDIs (foreign direct investment), it’s time we started thinking outside-the-box. The tired old paradigm that claims economic salvation, if we just entice (with low taxes, low wages, and minimal regulation) some giant multinational corporation to build here, just doesn’t work anymore in the long-term (if it ever really did). Corporations that have grown so large as to be independent sovereign entities, hold no allegiances toward any nation or locale. If another country offers them a “sweeter” deal, they will pack up and leave in a heartbeat – leaving its former host worse-for-wear.

        The goal of governance should be to serve the interests of the people, not to cater to the whimsical nature of amoral business enterprises whose only concern is profit. Societies that strengthen the middle class, and encourage small-scale entrepreneurship through education and technological innovation, will be those which inevitably succeed in the 21st century. Austerity measures are antithetical to this strategy.

      • Sonia K says:

        I meant “oversight in spending by the government”

        The model of business that you propose is very ideal- as opposed to what is practiced- businesses really opt for profits and FDIs will mean competition for local market as well as more consumer spending. But UK is already a consumer-rich country, spending is high. From the enterprise point-of-view, every company has its requirements and every country can’t cater to every company- can it?!??!!

        Changing business models to consumer-centric ones is a very long-term idea, one that needs detailed planning and perseverance. It is one that pays-off in a very good way- if only people realize!!!

  3. taospeaks says:

    When you hear such terms as “a winner in the global competitive race” and “to continue moving in the right direction” you really want someone to explain what winning the race actually means and what exactly makes the current direction so right. I mean no one ever says, “..if we do this then in 10 years this will be our outcome.”

    Can’t help but sometimes wonder if all of this just leads us to someplace we really don’t want to go.

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