Austerity 2.0: the cuts have started
Public debt has ballooned. The deficit is at historic proportions. And across the piece, we all seem…well…pretty calm about it. The media is not bashing the Government about it. Opposition parties endorse it. But the Office for Budget Responsibility (OBR) has produced some quite horrific charts in its recent pronouncements. Take this one, showing Coronavirus’ impact on UK GDP in a historical context:
Or this, highlighting the scale of the Coronavirus deficit compared to the 2008 GFC:
It looks horrible and we all know what inevitably happens next: tax rises and public sector cuts. And truth be told, we are just seeing, very quietly, the Treasury beginning that process.
The first sign of belt tightening was slipped out quietly in March, almost without anyone noticing. It was a ‘consultation document’ on the revision to Public Works Loan Board funding released by HMT to stop dead the level of spending by ‘entrepreneurial’ councils which have become property speculators funded by the taxpayer, Spelthorne Borough Council being the posterchild. Let us remember that Spelthorne is £120 million annual budget council which has created a £1 billion property fund by buying random property assets from around the country. There were always going to be some horror stories from all of that and HMT had become increasingly worried about it in the last year, hence the genesis of this ‘consultation document’ which we all know is less about consultation and more about signposting an inevitable change of policy.
The economic reality of Coronavirus – that the income stream from these assets has been negatively affected (we don’t need to tell our clients about that!) and the massive increase in the public debt/deficit due to the Government having to fund every airline’s cabin crew, bale out every small business, build new hospitals etc – will have meant that HMT will now be even more worried.
This is the first in no doubt a long line of Austerity 2.0 initiatives we have spotted. And so it begins…