With the UK under austerity measures of Chancellor Osborne, UK growth has been dismal thus far. In the last quarter of 2010 the economy shark by 0.6% which the Chancellor tried to pin on bad weather. The first quarter of this year saw growth at only 0.5%. The tax rises and budget cuts has knocked out 100's Billions of pounds of demand out of the economy. With inflation nearing 5% the Bank of England has resisted calls for interest rate hike from 0.5%. With many mortgages, personal and business loans tied to the central bank rate, the move will spare households the lost of more hard earned money , after the taxpayers had to bail out failed bankers.
Despite making losses the bankers are still handing out bonuses which the Tory government is powerless to halt. The Royal Bank of Scotland (RBS) which is 83% owned by the taxpayer and loss-making still handed out 0.9 Billion pounds worth of bonuses earlier this year.Consumer confidence has taken a hit along with a fall in manufacturing orders. Earlier in the year manufacturing was one of the few bright spots in the economy. The Chancellor has insisted there is no plan B and compared with stimulus program of President Obama, the evidence has shown that austerity is a failure.
Ed Balls the shadow Chancellor has warned that the UK government is cutting too fast and too deep, and that the cuts will kill growth. Under Labour in 2010 the UK was growing at 4.2%. The shadow chief secretary to the treasury Angela Eagle stated that "As the governor rightly noted, the UK economy is still 4% below the level it was at before the global financial crisis, while GDP in the US has now surpassed its pre-crisis peak."
Comments