Earlier this week The UK government read President Obama’s letter requesting that the G20 countries carry on stimulating their economies – in other words copy current US policy – and binned it.
George Osborne, Chancellor of the Exchequer, used his budget statement to force some unpleasant medicine down British throats in the shape of tax increases and cuts in public expenditure – with the promise of more public spending cuts to come.
“Our policy is to raise from the ruins of an economy built on debt a new, balanced economy where we save, invest and export. An economy where the state does not take almost half of all our national income, crowding out private endeavour,”
Naturally people aren’t out on the streets dancing with glee and there were squeals of displeasure from special interest groups. But it seems that most of us are actually behaving like political adults for the first time in years.
Despite slapping an extra £40billion of savage spending cuts and tax rises on the nation, Brits have given the Chancellor a big thumbs up.
On the issue if the chancellor has taken the right decisions for the nation as a whole 57% said yes, 23% said no and 20% were unsure.
Even when asked the question had he taken the right decisions “for you as an individual” the break was
Yes 42%
No 33%
Not sure 25%
Of course once the taxes and cuts begin to bite opinions might change. But at least we seem to be weaning ourselves off rainbows and unicorns.
Perhaps more people than usual read the gloomy comment from The Bank of International Settlements
As the Bank for International Settlements said in April, we have moved into a phase of this global drama where sovereign debt fears have reached “boiling point”.
It warned of an “abrupt rise in government bond yields” in industrial states as investors choke on a surfeit of public debt. “Bond traders are notoriously short-sighted, assuming they can get out before the storm hits: their time horizons are days or weeks, not years or decade. We take a longer and less benign view of current developments,” said the study.
“Rapidly ageing populations present a number of countries with the prospect of enormous future costs that are not wholly recognised in current budget projections. The size of these future obligations is anybody’s guess,” it said.
Chilling words for those countries whose leaders are still claiming that tackling the deficit is something that can be left on the back burner……
