Hammond: We’ve got the money, and we are keeping it

The Chancellor’s spring statement underlines why we can’t afford the Tories, argues John Rees
Philip Hammond’s passing resemblance to Mr Burns from The Simpsons is more than skin deep. Burn’s determination to wring every last cent from his employees is promoted to a national economic strategy by Hammond.

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The only really new thing in the spring statement is that government debt is rather less than previous projections estimated it to be. That should be good news for cash-strapped welfare services. Even more so since both the Prime Minister Theresa May and Hammond himself have declared that austerity is over.

But it’s not.

Hammond made it clear that even though he has more economic room for manoeuvre, he isn’t going to handover any serious amount of cash to the welfare state.

Why not?

Well, he is terrified that the Tory disaster of Brexit will drain the coffers. In a spectacular display of short termism Hammond held out the prospect of more public spending… On the condition that Tory MPs voted through Theresa May's Brexit deal or something like it. In other words, those sleeping on the streets, waiting in hospital corridors, surviving on low wages, or desperate for social care can wait because it’s more important for Hammond to hold out the prospect of public spending as a threat to solve the endless Tory party internal war over Brexit.

But there’s one thing that he is even more concerned with than Brexit. He is afraid that the UK economy is slowing, growth projections were reduced in the statement, and that a full blown global recession will be the result of the already existing decline in Chinese growth rates and the slowdown in economic activity across the European continent. Italy is already in recession, and the German powerhouse is facing renewed economic problems.

Underlying all this are even deeper problems. The truth is that the neo-liberal economic model, shared by both the new Labour government and subsequent Tory administrations, has failed to rebuild a sustainable recovery from the 2008 economic crash.

Just take a look at the key economic indicators, which show both the depth of that failure and the unreliability of previous government forecasts from the Office of Budgetary Responsibility.

The first thing to note from the graph below is that the UK economy barely recovered from the last recession before its growth rates declined once again, now bumping along at the same level as they were in the pit of the last economic collapse.

The second thing to note is that the forecasts were always too optimistic. Growth rates systematically fell short of predictions.

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In this second graph we can see the fundamental problem with the UK economy. Only Italy has a worst productivity record than the UK, and although this problem is depicted in the graph over the years since the last recession it is in fact it a decades long issue in the UK economy. Lack of capital investment, over reliance on military production, and the rise of finance capital, have all made Britain a low productivity, low-wage economy.

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And once again, as the third graph shows, the governments predictions have been over optimistic. The result is that the government fails to see how weak investment is, and therefore underestimates the need for a state-led investment programme that can reverse the historic weakness of British capitalism. The fact that research and development is also lower than every country except Italy, as the fourth graph shows, merely underlines the point that British capitalism, left to its own devices, is in capable of developing economy which provides stable, well-paid jobs.

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The fact that Hammond refuses to use the economic elbow-room that he has in order to help those worst hit by austerity gives the lie to the Tory claim that they are willing to see an end to the policies that have wrecked havoc across society.

But the deeper malaise of the economy revealed in the figures from the OBR are even more frightening. They show an economy with week growth and low investment which is now faced with the storm of a global recession blowing from the slowdown of the European and Chinese economies.

What that means is not only that there is no end to austerity insight, but also that Hammond and the Tory government are entirely oblivious to the nature of the long-term problems of the economy and equally unable to meet the challenges that the new global slowdown will bring.

Yet again it is obvious beyond all reasonable doubt that this government cannot provide any hope for the vast majority of its citizens, and that the only solution is that they are driven from office with all possible speed.

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