The detail of the Autumn Statement presented by George Osborne on Tuesday reveals some truthful observations on the global financial crisis. It does not blame Labour spending on schools, hospitals and police for creating a financial mess. It says….
1.3 The intensifying euro area debt crisis, driven by excessive levels of debt, now represents the most dangerous threat to the world economy since Lehman Brothers collapsed in autumn 2008. Even if this crisis is resolved quickly, the financial instability and uncertainty it has caused has been a blow to confidence and is damaging the UK economy.
1.4 It has been clear that the financial crisis of 2008 and 2009 reduced the UK’s growth potential relative to the unsustainable pre-crisis trend, but the extent of that loss is uncertain. Most significantly for medium-term growth prospects, the OBR has now substantially revised down its assessment of the level of potential output. That is consistent with evidence from previous financial crises, which have shown large output losses typically persist for many years.
1.5 As a result of these three factors — the inflation shock, the impact of the euro area debt crisis on confidence, and the ongoing structural impact of the financial crisis — the OBR’s November 2011 Economic and fiscal outlook shows that:
- economic growth has been revised down to 0.9 per cent for 2011 and 0.7 per cent in 2012,
- with a slower recovery thereafter;
- the trend level of economic output has been revised down by about 3½ per cent by the end
- of the forecast period. Comparing the OBR’s trend output projection with an extension of
- the Budget 2008 projection, trend output will be around 13 per cent below the pre-crisis
- assumption by the end of the forecast;
- public sector net borrowing and the structural deficit have been revised up in every year of
- the forecast as a consequence of the weaker economy; and
- public sector net debt as a proportion of GDP is forecast to peak at 78.0
HM Treasury: Autumn Statement 2011
So three reasons cited by the Treasury for the country’s economic woes are inflation, which has not been helped by the Tory Liberal VAT bombshell which increased Value Added Tax from 17.5% to 20%, the Eurozone crisis which is questionable because the full impact of a financial crisis usually takes two months to actually affect the day to day running of an economy and the financial crisis which started with the collapse of Lehman Brothers in Autumn 2008.
Compare that to what Brent Liberal Democrat Sarah Teather has blamed the problems of the economy on.
“For years Labour spent more money than the country could afford.”
“It is absolutely vital that we pay back the massive deficit racked up by the last Labour Government”
Liberal Democrat and Brent Central MP Sarah Teather (LINK)
Sarah Teather has criticised public spending by Labour which saying that spending on hospitals, police and schools caused the deficit thereby using this argument to justify making drastic cuts to Brent Council, Brent NHS and Brent’s police force.