Osbornomics Discredited: Time for a Plan B for Jobs & Growth
This week we heard the news that the UK economy shrank by 0.7% in the last quarter extinguishing any hope of a quick recovery from the latest downturn. The extent of the contraction shocked even the most pessimistic and is clear evidence of a deepening of the double-dip recession created in Downing Street. Construction has been, not surprisingly, one of the hardest hit sectors with representative groups in the North East warning of a possible 5,000 further job losses in the next 12 months unless the government takes decisive action.
When the Coalition assumed office back in 2010 it moved quickly to slam on the brakes for a number of large scale building projects including key infrastructure developments across the North East. Nearby, the much needed replacement Seaham School of Technology is still waiting to be given the go-ahead. The planned new hospital at Wynyard was also cancelled over two years ago. Cuts to capital budgets across government and cancellation of large public infrastructure projects has further depressed our economy. We are now feeling the devastating effects of what happens when government stands aside when it should be acting in the national interest.
We know that the North East is always far more vulnerable than elsewhere in the UK as its’ recovery and economic regeneration under the last Labour government was only in its early stages. Our area has seen some of the highest job losses from the public sector, an unrealised private sector-led recovery and increasing unemployment even when employment might have risen nationally and in other regions.
For ordinary people and their families, in employment or not, the implication of these figures is serious. Without a change of direction at the top of government demand will remain depressed, the labour market can only weaken, unemployment rise with the prospect of job creation become pie in the sky. Academics looking at East Durham describe some of our communities as unemployment ‘hotspots’. This is because unemployment concentrates in areas with little or no economic activity. Until there is government intervention in order to stimulate economic activity in these areas, there can be little prospect of job creation.
The government’s inaction and austerity agenda has failed and this should be the final nail in the coffin. It has depressed demand in the economy, taken money from the least well off and most likely to spend, in order to hand it to the wealthiest, and most likely to hoard. After two years while our economy has contracted, the prospects for economic recovery look worse than ever. Ministers often boast about maintaining record low interest rates and yet refuse to rise to the challenge of spending on public investment, which these low rates make a practical proposition, and which the worsening double-dip recession now makes an urgent necessity.