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Fight these crazy cuts: Join us on the march

5 September 2012

Manuel Cortes shows how the flawed thinking behind the GovernmentÂ’s cuts have wiped out any growth in the economy and why we must stand up to oppose them.

Our economy continues to be in a perilous state. Just recently the Bank of England downgraded its growth forecast for 2012 to zero. Our economy is now smaller than when David Cameron came to power. In May 2010 our economy was growing and we seemed be on the path to economic recovery, albeit a fragile one. The patient was on life support and great care and attention were needed to ensure that a double-dip recession was avoided. Yet the government decided that cutting the debt was almost its sole priority. We were told that cuts, although painful, were absolutely necessary and would lead to sustained economic growth. Well for sure, the cuts are really hurting but over two years on, they are clearly not working.

You know, politicians can be a right devious lot. During the 2010 general election campaign, Cameron and Osborne told us paying off the UK’s debt was just like you or me overspending on our credit card and having to cut back our spending to make repayments. But anyone who takes more than the briefest of looks at how our economy works will know that this is totally wrong. UK PLC functions on a complex web of transactions, so if the Government makes thousands of public sector workers redundant, then its tax take falls and benefit requirements grow. This inevitably leads to either greater borrowing or deeper cuts and tax rises.

Of course, the private sector is not immune to public sector cuts. If people are out of work they have less disposable income. From the local corner shop to the big high streets names, sales will drop, profits will be slashed and jobs will probably go. Government cuts in infrastructure, like billions withdrawn from school rebuilding directly cause private sector job losses in already-depressed areas like construction. In a nutshell, this is what is happening to our economy, with growth now off the radar for yet another year. There is a very real danger that this becomes a vicious downward spiral in which ordinary people – already bearing the brunt of the pain – take an increasingly disproportionate economic hit.

We have been here before. In the 1930s, the response to a deep economic crisis was to cut to the bone and beyond. This led to mass unemployment and a dramatic rise in poverty. In fact, the world economy did not even start to recover until the effects of US President Franklin Delano Roosevelt’s decision to defy conventional wisdom and spend his way out of the crisis started to filter through.

You may be wondering but what about debt? How will it be repaid? When it comes to eradicating deficits and debt, growth is the only show in town. As our economy gets larger tax receipts increase, the benefit bill reduces as people get back to work and budget surpluses occur. Perhaps more importantly, as our economy grows our total debt shrinks as a proportion of our national wealth – GDP. I know that this sounds kind of magical but it is true. Our GDP is around £1.5 trillion. For each 1 per cent of growth, an additional £15 billion is added to our national wealth year on year. So if we return to our trend growth of 2.5 per cent an extra £37.5 billion (and growing) would be added to GDP year after year. As the starting point grows each year, the 2.5 per cent average our economy achieved for many years amounts to an ever-greater sum. Cuts are not an economic necessity – they are the ideological choice of this government!

In March last year hundreds of thousands of ordinary people marched through London demanding alternatives to the government’s crude and damaging cuts. Since then, the need for a change of direction has, if anything, become even more acute. You will see within this Journal extensive coverage of why we all need to join the TUC March on the 20 October 2012 to demand a future that works. I would strongly urge you to come along and join the TSSA contingent on the day. You know, there are millions of voices up and down our country crying for change. Let us play our part in delivering a future that works!

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