The government doesn’t want to cut spending until the economy is robust enough to stand it. That sounds logical. On the other hand very big increases in spending began this year and begin to accelerate like a shark lenders interest payments.
Since 2000 government spending has ramped up at a rate not seen before except in wartime. We all had a ball at the time and now we’re hooked. Like addicts, even today’s minor tweaks to the budget had the public sector unions perspiring at the collar. Yet public spending was well over double what it was 10 years ago even before the crisis. Like the bankers, public workers have seen a bonanza from the government but don’t think they have and don’t want it to end.
It seems the government isn’t making any big decisions at this time. Today was as Mr Cable said about boilers and bingo. Although if the government is playing politics what are the opposition to do as they might appear the evil wolf when in all likelihood there is little difference between what any of them will or can do.
The Irish government has today announced major cuts. Hopefully it won’t come to anything as big as that but it seems improbable that today’s announcement in parliament has any true relationship to what needs doing to the terrible UK budget situation.
Yet I’ve lived through recessions before and uncomfortable as they are most of the population gets through relatively unscathed. Although when Mr Callaghan borrowed from the IMF in the 70’s the public sector unions revolted at what appeared to be minor pay restraint and in came Mrs Thatcher. With an election imminent Mr Brown isn’t going on that route.