Tuesday, 25 January 2011

I'm Agreeing with Labour?!

I suppose it had to happen at some point. Amidst all the spin and hyperbole, the nonsense, the lies, and the brain-dead half-wittery, Murphy's Law dictates that sooner or later, Labour are going to come up with something reasonably sensible.

For quite a while now, Labour have been banging on about growth in the economy - that increasing tax revenues by growing the economy is the best way to reduce the deficit. And that message seems particularly pertinent today when the news has broken of a 0.5% contraction in GDP, raising the spectre of the 'double-dip' recession.

Now, of course, Labour are blaming the Coalition for this. Never mind the fact that the previous 'growth' in the economy can largely be attributed to the racking up of an additional £170billion of debt last year alone, and the printing of nearly £200billion to prop up our ailing economy. They might do worse to take note that an economy that requires such massive support from the State is not really growing, but simply inflating.

The Government have, rightly so, started to withdraw that support. No more new money has been printed, although with inflation spiking, we are now starting to feel the effects of the Bank of England's Quantitative Easing programme. Borrowing is being reduced in line with spending to help reduce the size of the deficit. All of this is necessary, to prevent the world credit markets from perceiving Britain as a poor credit risk and either loaning us money at significantly higher rates or refusing to lend us money altogether. For the impact that this can have, see Ireland.

However, one thing that has been lacking from the Government is a plan for growth. Labour are right in that regard - reducing the deficit and restoring order to the public finances is necessary, but getting the economy back on a sure footing is just as important. And with the recent increase in VAT, as a refusal to lower fuel duty, even though petrol prices are well over £1 a litre, they seem to be sending a mixed message.

Labour are wrong on the causes of the deficit, wrong on the need for spending cuts and wrong on the speed at which this needs to be done if we are to truly banish the prospect of a UK sovereign debt crisis. However, when it comes to getting the economy going again, they do have a point.

Wankers. But they've got a point. This time.