All we need is growth. All we get is higher taxes and plunging confidence. Now the official forecast tries to catch up with gloomy reality, halving this year's growth and warning of more price rises and higher inflation to come.
The Chancellor today is having to live with the big damage she did to the UK economy by spending the third quarter of last year terrifying people and businesses about tax rises to come, and the last quarter imposing them.
A tax on jobs, taxes on small businesses and taxes to drive better off people out of the country made the perfect storm. The economy plunged from being the fastest growing G7 economy in the first part of the year to no growth in the second half. This January the economy went backwards.
Today’s updated economic forecasts from the OBR make poor reading. They have had to admit they were far too optimistic in their assessment of the budget, expecting the large increase in public spending which is one fifth of the economy to power growth.
They missed the point that the crippling taxes hitting the private sector were bound to turn off investment and kill new jobs, leading to a downturn in much of the private sector, the dominant part of the economy.
So now the Chancellor must cut back the surge in public spending she wanted as her high tax austerity damages business and forces consumers to rein in their spending and lowers tax revenue.
The full horror for a cash hungry public sector will come on June 11 th when Rachel Reeves must spell out the detailed spending plans department by department and service by service. She has had to find £24 bn of cuts to get back on track.
We can see now that her big spending, tax and borrowing splurge last autumn gave the economy a hang over and so these are sobering times. The government announced cuts to benefits but had to increase these as they had exaggerated the cash savings from them.
How could they make such a mess of such a sensitive matter, when so many disabled people are worried if it means they will lose their support? We now know many benefit recipients will lose their entitlements or have them reduced.
Sir John Redwood has said Rachel Reeves needs to help of the government to rein in the numbers of migrants
GB News
What should she do to rescue the economy and propel it to growth? She needs to get back all that lost productivity in the public sector which is costing us another £40 bn a year to run the same level of service.
She needs to help the government rein in the numbers of migrants, as anyone coming into a low pay job or onto no pay benefits imposes a big cost on the state to provide homes and public services. She needs to curb the extreme losses of the Bank of England, and the runaway railway costs.
Death by a thousand cuts whilst allowing the NHS, defence, and the Bank of England to spend away is not the base for a successful economy.
Allowing Ed Miliband to raise energy prices so much, to prevent new oil and gas wells and to ban new petrol cars is adding to the carnage.
The world does not owe the UK a living, and we cannot compete industrially with our current sky-high energy prices and the bans and closures the government specialises in.
Taking money away from the disabled instead of getting to grips with an over manned and unproductive public sector will create more trouble ahead. It is difficult to believe the growth, migration, and inflation forecasts for the more distant years in the absence of policy change to improve things.
