Saturday 23 March 2013

Budget 2013 - Perhaps there won't be any growth

After announcing in this week's budget that his growth forecasts for the economy have been downgraded. The Chancellor George Osborne has had to argue that his economic policies are still working.

Since the last election in 2010, there's been two different arguments put forward on how to deal with the economy.

For the Conservatives the priority has always been about cutting the budget deficit and lowering the national debt.

For Labour, the argument is for less severe government cuts and more government borrowing to help stimulate growth in the economy.

Here's a question for you: What if it makes no difference which plan you agree with. What if there isn't going to be any real growth over the next 10 years?

Labour can say what they like, I'm not convinced that if they were in power the economy would be in better state.

We might soon find out, as there's a strong chance they'll be back in power after the next General Election; it seems the last one was a good one to lose.

I don't think they've fully acknowledged the mistakes they made when they were in government or explained the lessons they've learned.

The impression all three main parties give is that growth will naturally come - I'm not convinced. The reality we might be facing is on of a long period austerity and stagnation with government policies having little or no effect.

A depressing thought I know. Maybe the truth is that the growth we experienced during the first decade of the 21st Century was artificially created and that now were having to deal with a tough economic re-adjustment where living standards and wages are going to decrease.

No politician is going to come out and say we have to accept we're going to be poorer and that there isn't much that can be done. That would be political suicide but I don't see anything improving anytime soon.

I really think there's a crisis amongst the political classes across many Western Governments. Nobody seems to have an idea on how to create growth.

There needs to be a serious think about what the economy will realistically look like in 5 - 10 years time, maybe for governments it will be about effectively managing economic stagnation and nothing more.

Let me know your thoughts.

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