‘Slasher Osborne’ risks double-dip recession
The Mole: David Blanchflower labels Tory cuts ‘the height of irresponsibility’
During the run-up to the recent general election, no one spoke more forcibly against the Tories' slash-and-burn proposal to deal with the £156bn national deficit than David Blanchflower, the former Bank of England monetary policy committee member.
Last October he described the Cameron-Osborne plans as "probably the most woefully inept set of economic proposals I have ever seen". He warned of social unrest and the return of the soup kitchens.
And his views held considerable sway in the City. A banking executive told The First Post at the time: "I don't really know who disagrees with him."
Of course, Cameron and Osborne chose to ignore him and have been busy warning us of the tough times ahead. But has Blanchflower put his head below the parapet, aiming to ride out the storm with the rest of us? Not a bit of it.
With Osborne's emergency budget in the offing, Blanchflower is back on the offensive, convinced the Tory plan is about to push Britain back into a second depression.
An Observer survey of leading economists asked whether Britain should be cutting its deficit so fast and so deep. Blanchflower was adamant: "It is the height of irresponsibility," he said. "It may be good for investors but it certainly is not good for the British people, who are likely to see unemployment rise inexorably."
He cited Paul Krugman, the US economist, who wrote on his blog last week that such policies are "utter folly posing as wisdom".
In a column for the Sunday Mirror, Blanchflower - writing under his nickname Danny, after the famous Spurs footballer - went further.
"Chancellor George Osborne," he wrote, "is going to decimate public spending and probably raise VAT - perhaps to as much as 25 per cent - in his totally unnecessary and wildly dangerous emergency budget.
"It will do terrible and probably irreversible damage to the British economy. I am now 100 per cent certain these actions will push us into double-dip recession."
Blanchflower also criticised Cameron for talking the UK economy down and making comparisons with Greece.
"We are nothing like Greece," he said. "Their public debt is much higher than ours, there is widespread tax evasion, a poor tax collection infrastructure and lots of needless impediments to doing business.
"According to the World Bank, Greece gets the lowest score across western economies for its business environment. In contrast the UK government can borrow money at very low rates of interest and there is no crisis in the markets. The UK is demonstrably not Greece."
Blanchflower's biggest fear - as it was when he made his thoughts known last October - is the fate of Britain's school and university leavers.
"The young are really going to get hammered," he said. "There is a real danger of a lost generation... Over the last year, for example, two-thirds of all jobs lost were held by people under 25. A hiring freeze in the public sector will especially hurt the young."
Blanchflower lambasted 'Slasher Osborne' for axing a series of job creation schemes to help young people. "The result of all this: I fully expect youth unemployment to increase by at least half a million over the next year or so."
Don't say he didn't warn us. ·