Dismantling the Budget 4: Economy
by Part four of deconstructing the budget, looking at Alastair Darling’s plan for the British economy. In this section I will be looking at the UK economy.
• Economy forecast to shrink 3.5% in 2009
We’re now officially in deflation. This means that the price of things may start to drop, but at the same time businesses will need to cut jobs and costs to make profit, meaning people will continue to loose their jobs and face increasing stress at work. Basically, the gap between the rich and the poor will grow if this is not addressed.
• Growth expected to pick up in 2010, expanding by 1.25%.
How exactly is growth going to pick up? Where is all this money going to come from? Looking at this budget as a whole, I can see a lot of money being spent, but I can’t see much that will actually help the system as a whole. I also can’t see where this money is coming from either…
• Public borrowing to increase to £175bn this year
…beyond borrowing loads of it, which will lead to more debt in the future, and further economic pressure. Tax and spend goddamnit! Borrowing is only going to be a short term fix. By increasing taxes to pay for new scheme, we suffer more in the short term, but the long term is far more secure. It’s not about just fixing the economy, it’s about a sustainable economy.
• Borrowing levels to rise by £173bn, £140bn, £118bn and £97bn in years after
Economy to grow by 3.5% annually from 2011.
I never thought I’d say this, but I’m with David Cameron on this one. I don’t see how this can be turned around so dramatically in 2 years. I think we’d be lucky to see ANY growth in 2011, let alone 3.5%. As far as I’m concerned, this is just words, cheap words at that which look good, but fall about under examination.
• Consumer price inflation to fall to 1% by end of year.
Good luck.
• Capital investment to continue at historically high levels until 2012.
Purchasing assets is all well and good, it helps companies to expand. At the moment though, many companies are trying to cut costs and jobs to keep profits up. So why would they be expanding? Some are trying to buy assets while it’s going cheap, fur use later when the economy recovers… if the economy recovers. This is a gamble though, we can only hope that the money put into the economy by buying these assets well help it recover. If not, expanding companies may simply pop.
Part 1: Alcohol, Cigarettes and Fuel
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