Brian Monteith: Recovery plan doomed to fail

David Cameron and George Osborne are up a gum tree and cannot come down. Unemployment is slowly climbing up and there is unfortunately no end to this trend yet in site. The number of public sector jobs being lost due to the vital deficit reduction is greater than the number of new jobs being created by the private sector.

Meanwhile, inflation grows while those on fixed incomes, such as pensions, cannot avoid the growing cost of living. People are clearing their debts rather than spending – the Christmas sales will come early as a retail catastrophe beckons.

The Tories’ Plan A for economic recovery is failing – their only saving grace is that Labour’s Plan B (or the SNP’s Plan McB) or Plan C, D or E would all be much worse as the international markets would punish our lack of resolve.

The truth is that Plan A was always insufficient to cure the problems that the Conservative and Liberal Democrat coalition inherited.

This is for four reasons – not one which the Labour Party, no matter who leads it, can address.

Firstly, in attempting to make the Conservatives look caring, compassionate and, therefore, electable, George Osborne has always rejected the very incentives that encourage economic growth – competitive tax rates that give our businesses an advantage and attract other investors to our shores.

Secondly, having delivered a deficit reduction plan that did not make room to provide the necessary incentives such as lower taxes for business and people with capital, it is now nigh impossible to introduce further public spending cuts when the public is beginning to think the current regime is already too strict (even though it’s less than one per cent of government spending).

Thirdly, the economic policies of the eurozone and the US (which resemble Labour’s Plan B) are making the world economic climate worse. Having ignored the necessary public spending cuts that Britain has followed, the scale of the debt is swallowing up whole economies such as Greece, Ireland, Italy and Portugal while the US is becalmed. Had Obama and European leaders been less worried about being loved, the British economy would not be at risk of stagnating as demand for our goods and services would be higher.

Fourthly, and most crucially, even if the Conservatives find the wherewithal to act by going all out for economic growth they will be prevented by the Liberal Democrats who would rather put their vindictive belief in punishing high earners who create jobs before the national interest and the relief of poverty.

The Lib Dems cannot bring themselves to admit their guilt about wealth creation is misplaced – that would remove the second leg from their bar stool (the first being that they were more trustworthy than other politicians – but then along came tuition fees). The Lib Dems would then topple over and never get back up.

None of this should come as a surprise for the foundations of this catastrophe were laid down many years ago by Gordon Brown when he spent beyond his means.

Economic recovery will be a slow process, but as usual it will not be our political leaders who pay.