Downloading PDF. Please wait... Issue 2207

Cuts are class war, not ‘economic need’

This article is over 13 years, 11 months old
The Tories’ cuts budget is creating ideology-driven austerity. It could increase unemployment and cause a double dip recession, writes Mark L Thomas
Issue 2207
Workers protest outside the Health and Safety Executive on budget day
Workers protest outside the Health and Safety Executive on budget day

George Osborne’s budget threatens to produce an economic slump.

Growth is weak and unemployment is 2.5 million. The banks aren’t lending.

The only barrier stopping the worst recession since the 1930s turning into a full blown repeat of the Great Depression has been the huge expansion in government spending here and across the world.

Yet, George Osborne and the Tories, backed by their “progressive” coalition allies the Lib Dems, claim the “bloated” public sector must be cut now.

They say that this will free up private sector businesses to take up the slack in demand in the economy, leading to economy growth.

Osborne and his cheerleaders in the Tory press point to Geoffrey Howe’s brutal budget in 1981 under Thatcher’s first government as their model.

Howe’s tax hikes were a vicious attack on the poor. The Tories claim it paved the way for economic recovery.

In fact it meant economic devastation and soaring unemployment.

They say pain now will generate growth tomorrow.

Yet far from boosting growth, austerity is likely to undermine it, triggering a double-dip recession.

Osborne hopes exports can be a central motor of economic recovery.

But Britain’s biggest export market is the eurozone, and its states are also slashing budgets.

The powerhouse of the European economy, Germany, has just announced an 80 billion euros austerity package.

China and Japan too are planning to sharply cut back government spending.

Osborne boasts he has helped convince other states to adopt austerity measures.

Yet as the Financial Times points out, the combination of the crisis in the eurozone and its “enthusiastic embrace of the fiscal hair shirt, makes escape via far higher exports unlikely.”

If Osborne’s austerity budget pushes the British economy back into recession it will lead government finances to deteriorate, as tax revenues fall and welfare spending rises with growing unemployment.

Nobel prize winning economist Paul Krugman called budget-slashing “utter folly posing as wisdom”.


Former Labour ministers will make many of these points, but their own plans if elected were barely less severe.

Labour was committed to “a greater and faster reduction in the budget deficit than any British government in modern times,” as the Observer put it last week

The real motivation for the cuts are not the spurious argument that there is no alternative being pumped out by Osborne and echoed by the media.

The cuts are about launching a vicious class attack on the poor, workers wages and the welfare state. We need to pursue that war with equal vigour.

Unemployment is still rising

In the first three months of this year:

  • Unemployment up 23,000 to 2.47 million
  • Youth unemployment (16‑24 year olds) up 11,000 to 926,000
  • Long term unemployed (over 12 months) up 85,000 to 772,000


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