Tuesday, 26 February 2013

The great lie of our times: The Left wail about 'ruthless' cuts. But the reason Britain's credit rating was downgraded is that government spending hasn't fallen by a penny

Daily Mail
"Ever since George Osborne became Chancellor nearly three years ago, it has been the received wisdom, thanks to shroud-waving unions and the Left-wing establishment, that he and his Treasury team have imposed ‘ruthless’ cuts on the state sector. The constant cry from Labour, the public sector unions, local authorities and many commentators is that the cold-hearted Coalition is engaged in a ‘slash and burn’ policy that will end in the wholesale destruction of the welfare state. It is a cynically dishonest analysis which aims to make us believe that the reason Britain is suffering a painful period of austerity is because of the draconian effect of ‘cuts’ to welfare payments, the NHS and all manner of public services, from libraries to the arts. The truth is that this is utter nonsense. In fact, Britain’s monstrously swollen state still devours almost half the nation’s output. Total state spending and borrowing has not been cut in absolute terms at all. Indeed, the burden of debt, the accumulated amount of borrowing made by governments down the years, is rising relentlessly. It was an understanding of this stark truth that led to Britain losing its AAA credit rating last week. The world’s market monitors finally lost patience with our inability to control our borrowing and lack of economic growth. As the credit analysts at Moody’s point out, Britain’s burden of debt will keep rising until 2016, when it is expected to reach a staggering peak of 96 per cent of GDP of total output. Even that horrifyingly large sum will not be the true figure. For the Government is guilty of a sleight of hand by trying to make the statistics look more healthy by boosting the Exchequer’s ledger (with the help of an unexpected windfall worth billions from the Bank of England’s policy of printing extra money). This amounts to a piece of accounting trickery that makes the volume of debt look smaller than it really is. The fundamental truth remains that most areas of state spending — particularly welfare payments and social security — are still growing uncontrollably."

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