The State of the UK Economy

On Monday the UK was put on negative watch by the credit ratings agency, Moody’s. This means that the UK has a 30% change of losing its AAA rating within 18 months, Austria and France were also put on negative watch. Moody’s’ main reason for doing so was the flat growth for about a year now and little prospect of a recovery. Moody’s said the prospect for growth in the UK economy is weak and is weakening. The chancellor has taken this opportunity to say that there must be no deviation from his policy of austerity. Despite the fact that Europe, which has had austerity is flat lining and America, where there’s been a stimulus is growing healthily. Osborne is spreading a lie that he is getting government expenditure under control, even though the UK has the highest rate of borrowing of the vast majority of western nations.

The chancellor wants to balance the books, away from borrowing and towards manufacture. I completely agree with him, this is exactly what we need to do. But he’s doing it in a very strange way, manufacturing will not magically appear out of thin air, the government needs to try and stimulate the economy so manufacturing will start up. Instead the government is trying austerity and it’s not working. In the last comparable financial crash (1929) they tried austerity first and it bankrupted the world which led to the rise of European dictatorships, Hitler and WWII. By the time they got the crisis under control (through stimulus) it was too late.  Personally I don’t believe there’s much chance of dictatorships rising again; I do believe that the UK economy will not recover for a long, long time if Osborne continues with harsh austerity measures.

Osborne needs to look to Obama and copy him, not Merkel.