Adam Lovejoy reports from outside 11 Downing Street: Now that we know that Britain’s GDP has dipped in the last quarter of 2012, by 0.3 per cent, if you’re fussy about figures, the question that is lingering on everyone’s mind is this: could it be that Chancellor George Osborne is doing something wrong?
Incidentally, Mr Osborne, who is in Davos at the moment, along with Dave and Boris, has been giving interviews and insisting that the latest GDP figures were not unexpected, reflecting the difficulties that the economy had been encountering in the past year. (Well who could have known, George!) He also insisted that his course was the right course and that Britain was on track to beat the budget deficit. It wasn’t a convincing performance though and in an ideal world the Chancellor should have simply stood down, letting somebody else have a go at it. But that’s not how things work in the ConLibDem coalition, that fine gathering of men and women, who cling to their posts while safe in the knowledge that their glorious leaders, Nick and Dave, have wisely pushed an arrangement through parliament that introduced a fixed 5-year term for this government. So even if the heavens fall the current collective would keep on toiling.
Anyway, as things stand Mr Osborne must be missing something if the economy is not showing any signs of life. But what could it? Maybe he is wrong in providing his unwavering support for the banking industry that has been receiving some serious taxpayer money through the quantitative easing scheme, and many other schemes as well, but failing to pass any of it on to the economy? Mind you, the word on the street is that QE will actually continue and on top of the £375 billion that the banks have already received through it another £50 billion are in the pipeline, with a possible similar amount to follow. So it must be the right thing to do then, because otherwise QE would have been shelved. (Incidentally, the Governor of the Bank of England, Sir Mervyn King, who is directly responsible for QE, said earlier this week that Britain was going through a ‘gentle recovery’, which sort of proves that he has his own take on things and likes to say things that are later contradicted by official stats.)
But could it be that Mr Osborne is wrong about the rates of interest that lenders charge on their loans? What if he fails to understand that rates of 30 per cent rising to 1000 and even 4000 per cent on occasions, with the base rate sitting very low at 0.5 per cent, could be strangling consumer demand, or any other demand for that matter? And maybe, just maybe, it’s his reluctance to cap interest rates on lending that is dragging the economy down? Well, if that were the case, the Chancellor would have already done something about it, wouldn’t he? So it can’t be the extortionate rates then.
But what of the terrible plight of thousands of small and medium businesses, what if the Chancellor missing this point? These companies provide the majority of jobs in the country and the Treasury must be aware of their dire situation, what with the banks not lending and the big boys pushing them hard. But it can’t be that either, otherwise the Chancellor would have already told his friend Dave to appoint a Minister for Small and Medium Businesses who would have had the money at his disposal to make a difference. So no, the problem obviously doesn’t lie with small and medium businesses going down in their thousands.
Could it be then that blowing huge amounts on overseas aid is causing a bit of a problem for the British economy, with those 11 billion plus smackers wasted on propping up foreign dictators and lining the pockets of government officials instead of, say, helping the British construction industry? Well, the Chancellor must know something that we don’t and obviously considers that 11 billion investment overseas as a sensible choice.
And the questions continue. Could it be that George is missing the fact that the 20-per cent VAT is hitting people across the board and pushing their disposable incomes down and undercutting retail sales? Naah, can’t be that, otherwise Mr Osborne would have cut the VAT. Onslaught of Chinese-made goods on Britain? No, can’t be that eitherl. Banks and big businesses gambling on the markets instead of investing into industry? No, no and no.
So what is it then that Mr Osborne is missing? Well how about this: what if he’s got no idea about finance? Now that might be a serious reason why the economy is going down.