The Economic Mess Which Labour DID NOT Leave Britain In

by

Dave Cross

It seems to be the policy of the the United Kingdom’s Coalition Government and right-wing press to constantly state the “fact” that the Labour Party has left Britain in an “economic mess” – giving them a perfect excuse to cut public spending and blame the opposition.

The idea, like with all propaganda, is to repeat the statement to such an extent that it becomes true – even though it has no basis in fact. The argument is, in fact, deeply flawed.

And the alternative argument – the blindingly obvious truth – is forgotten (except by a handful of Labour MPs).

So what is this truth? The irony is that everyone knows – it’s a global recession.

That’s right – it really is that simple. America, Ireland, Portugal, Japan and many other countries all have the same problem – and in some cases worse.

Ireland, for example, has a budget deficit which is a whopping 30 per cent of its overall GDP. The country is almost certain to face a double dip. And why? Because they implemented exactly the same policies as the Tories are now – cut, cut and cut some more.

And considering the American economy was probably hit the worse by the recession, since it started there, it seems to be on the recovery. The OECD, which is based in Paris, indicated in its latest US Economic Survey that “after shrinking through the first half of 2009, US GDP began to increase again and is now projected to be 2.6 percent higher in 2010 than the year before.”

And why is this? Because President Obama is pumping money into the economy – exactly what Labour would have done.

Our deficit is 10 per cent of our overall GDP. It’s not ideal, but it is by no means fatal – and no different from many other countries.

David Cameron’s classic argument is that we have the highest deficit (relative to GDP) in the G20 – so that in itself is proof that it was Labour’s fault. The simple explanation is Britain is highly dependent on the financial industry – which makes up around 40 per cent of its GDP. Most of the other countries in the G20, however, have an economy based on manufacturing.

Germany, for example, is a huge manufacturer. Important to Germany are its traditional industries of steel and coal mining – both heavily subsidised and still large employers. Precision engineering remains a strong area. Aerospace is a small but growing industry – also heavily subsidised – and German companies often join with companies from other EU countries.

Britain lost its manufacturing industry in the 80s. Just one of Thatcher’s damaging policies was to close down the coal mines for her own political purposes. Without an export it became more and more dependent on borrowing and lending.

It’s bizarre that these clear arguments are rarely put forward. Even in America Gordon Brown is hailed as a hero for saving the world economy. It may be a product of the right wing press in Britain – and I don’t like it.

The blog on which this is posted is

dscross.wordpress.com

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The Economic Mess Which Labour DID NOT Leave Britain In