It is now very clear to everybody that the governments plan A for economic recovery is just not working. The fact of the matter is we have high unemployment which is now at its highest for over 17 years.
Despite the lowest interest rates since the war growth has all but stalled. Wave after wave of economic figures have all concluded that the British economy is faltering.
If the Government persists with Plan A the deficit is likely to rise not fall because as more people become unemployed the government has to pay more out in benefits while receiving less in taxes. This means they have to borrow even more money at possibly higher interest rates from the highly stressed financial markets. At the same time inflation is high and following record rises in the prices of essentials such as food, fuel, gas and electricity is likely to increase substantially. At the same time wage rises are failing to keep up with inflation. This is likely to curtail the amount the hard pressed people of this country are able to spend on other goods and services.
Both the markets and the politicians who serve them are failing to recognise that we are in danger of falling into a semi permanent crisis of stagnation where the demand for consumer goods and services are inadequate. In other words because of falling real wages people cannot afford to buy the products that they need let alone want. This will increase the likelyhood of a world depression and exponential rises in unemployment that will result from it. This is exactly what happened in the 1920’s and it took a World War to lift the world out of depression.
The seriousness of the situation is reflected in the economic performance of the retail sector over the past 12 months. Many big retailers have had prolonged sales and reported declining profits as shoppers have stayed away.
When this is coupled to the fraught international economic situation there is every chance the UK will enter into a prolonged double dip recession unless the government takes immediate action to address the fast deteriorating economic situation.
It’s time for a Plan B. What should the government do? They could adopt emergency measures that can quickly save jobs and create new ones including:
l reversing cuts to get the economy moving again
l directing quantitative easing to a Green New Deal
l creating a British Investment Bank to leverage and back investment in low carbon sectors such as housing, transport and renewable energy.
These measures could in part be paid for by the introduction of a Financial Transactions Tax. Other measures that the government might use to pay for Plan B such include making large companies such as Boots Pay their fair share of the taxes, tax bonuses given to the fat cats in the banking industries or tax the superprofits made by the utilities and fuel companies.
Doing nothing is no longer an option, the Government must stop blaming everything on market forces and start to do what the people elected it to do, that is to put the national interest first and hold an emergency Budget that would instigate a Plan B for jobs, fairness and sustainability to strengthen the British economy.