Britain’s ruling Conservative Party has been rigidly following an outdated and intellectually discredited economic ideology ever since they came into office in 2010.
They have embarked on a dramatic program of spending cuts which has likely lowered the standard of living for the British people while simultaneously stymieing economic growth. Data released over the past two weeks has revealed that the negative consequences of the party’s free market policies are becoming more and more obvious.
On October 5, two days after Chancellor George Osborne gave his speech at the annual party conference claiming that his cuts to public spending were repairing the damage done by the financial crisis, the Office of National Statistics revised down the growth figures for the preceding two quarters. Instead of growth of 0.5% and 0.2% in the first and second quarter, the new data suggests the British economy only grew by 0.4% and 0.1% over the same period. When compared to the -0.5% growth in 2010’s fourth quarter, it becomes clear that the UK economy has not grown at all during the past nine months, a stark contrast to Osborne’s original claims.
On the same day, the IMF warned European countries, including the UK, that if they do not start to show positive growth, they should consider delaying cuts. Unfortunately for the Conservatives, cuts to public spending are the only solution to the crisis that their ideology will allow. Later that same week, the credits agency Moody’s announced that it was downgrading the credit ratings of 12 of Britain’s largest financial firms. To be fair, this news was not unexpected, but it demonstrates a decline in confidence in the UK’s finance industry.
On Wednesday, the Office of National Statistics published the employment figures for the last quarter, which suggested unemployment has increased by 0.4% over the previous quarter, reaching 2.566 million people. This would be worrying news for any government, but for the Conservative party, it is of particular concern. If this figure were to reach 3 million, it would most likely precede the evaporation of any electoral support the party might have hoped to retain from independent voters. Three million unemployed is not an economically significant figure, but it holds a certain historical and psychological weight in British politics. Under the first Thatcher government of the early 1980s, the Conservatives enacted a similarly brutal program of public sector reforms which culminated with unemployment exceeding 3 million. The figure became a rallying cry for the political opponents and left a major scar on the Conservative party’s reputation. My guess would be that if anything will get David Cameron to change his economic policies, it would be the threat of three million unemployed.
All of this bad news came in the same week the minster for defence had to resign over a corruption scandal and the home secretary was caught lying in her speech to the party conference. The Conservatives are supposed to be in government until 2015 but it seems increasingly unlikely that they will make it that far.