Can The Conservatives Afford To Keep George Osborne?
George Osborne pledged in his 2012 Budget to double our exports and achieve £1 trillion by 2020. It was a monumental challenge for the country, nevertheless, Osborne and the Conservatives promised that it was possible to achieve it by 2020 because of Conservative leadership and the management of the economy.
However, the recent figures released by the Office for National Statistics (ONS) showed that the value of all goods and services sold abroad fell by £1 trillion to £512bn last year. It is now unlikely that the British exports will ever achieve near £1 trillion by 2020.
The Conservatives would certainly argue that it is just a temporary “slump” and our exports will recover soon. Unfortunately for them (and us) it’s unlikely that we will see any kind of recovery. Exports of goods alone tumbled by £8.1bn to £285bn, while imports fell by £6.2bn to £410bn, resulting in a record trade gap of £125bn. This means that our economy is not competitive enough and that we are selling fewer goods and services to our business partners. Consequently, it’s another broken promise that must be added to the long list of failures by the Chancellor.
In 2010, the Conservative Party made an ever bigger pledge. During the whole year and the year after, we were told by the Chancellor that China would become our best economic partner and that all British businesses should open their doors for Chinese investors and selling opportunities.
What George Osborne forgot to tell us is that China was hit by a mammoth economic slowdown and therefore our exports to China have fallen since 2011 fuelling more fears that the economic slowdown there will gravitate to the UK soon. Another example of a broken promise from the Chancellor.
The Chancellor, who was banking on the economic pick-up to boost his chances of taking over from PM David Cameron, didn’t actually manage any kind of economic recovery. All his plans were formulated using a single, aggressive strategy based on increasing the exports market for British goods, especially outside of the EU. But the slowing of the global economy has now dented growth and the Institute for Fiscal Studies has even warned that Osborne it will have to crank up spending cuts and tax hikes if he has any chance of meeting another target – eliminating the budget deficit by 2019/20.
And here comes the biggest lie of George Osborne: the UK national debt decrease. Under his economic leadership, the UK national debt is spiralling out of control. The debt was evaluated at £1.1 trillion in 2010 when George Osborne became Chancellor. It is now estimated at £1.66 trillion. In real term, it means that the UK national debt grows by a staggering £5,170 per second.
The debt per UK tax payer is now £45,500 and is still growing. Every child born in UK has a debt of £26,500 thanks to the Conservative’s mismanagement of the country’s economy. George Osborne has made it his mission to reduce the size of this debt. However, his plans have repeatedly failed. Rather than starting to pay debt down by the end of the last parliament as he pledged in 2010, the debt’s value rose throughout.
In reality, he never intended to control the national debt but wanted to use it as a political weapon to force more austerity upon the public. Within the Conservative world, it is deemed unfair that the rich pay for the poor. If the NHS does not work from the result of the ‘rich’ not paying their taxes, that’s just fine as most members of the current government are wealthy enough for not relying on the NHS. The same Conservative principles are used against disabled people: “If they can’t work, why should we pay? If the national debt keeps rising, it means that we might have too many people that are milking the welfare system and we must punish them”.
Therefore, a rising national debt is a good thing for the Tory ideology as they use it to set up their own political agenda and force the population to accept more austerity, more cuts and therefore more debt.
If the Chancellor was serious about reducing the size of our national debt, he would have made sure that all companies operating in the UK pay their fair share of taxes. As we have seen with Google UK, they can pay no corporation taxes at all, without consequence. It does not matter for the Chancellor as he never really intended to get them to pay. So here we can’t say it is a failure, just a big lie.
Now let’s be honest. Mr Osborne knows that he can set as many fiscal mandates as he likes; the public is unlikely to notice. He can lie as much as he wants on his true intentions because it will not have any real impact on his credibility as a Chancellor.
However, what people are likely to notice, is whether the economic growth they so regularly hear trumpeted by the Chancellor is actually making a difference to their lives.
Yes, the Chancellor’s political advisors know that one of the key motivators of voting behaviour is whether people feel, and actually are, better off. And thus, the figures are pretty gloomy.
George Osborne has created a low-inflation economy with companies keener on paying their shareholders rather than paying their employees more money. The consequences are that the pre-financial crisis relationship between high employment levels and wage inflation is stumbling. Last year, Osborne made the confident prediction that real incomes would rise by 3.75%. It has now been discreetly downgraded to 3%. Some financial institutes even think that real incomes could potentially grow less than 2%.
Now, of course, with inflation at 0.2% that is still an increase. But after the 2009-2014 ‘great pay squeeze’ which saw median incomes for all employees fall by over 9% in real terms, there is still a long way to go before economic growth releases a more confident feel-good factor amongst electors. Therefore, the low wage growth economy that Osborne has created is now becoming an economic problem for the Chancellor and could soon become a political problem for the Conservatives. That is the last failure (so far) of George Osborne. He is undermining himself as a potential new Prime Minister.
George Osborne has repeatedly failed to deliver on his promises since he became Chancellor. He has promised that our exports will help to deliver a fairer and better UK. With a huge drop in our exports, this will not happen. He has promised that the UK national debt will decrease, but it is now spiralling out of control. He and the government have used the national debt as a political weapon for more austerity and more cuts. Our welfare system was the victim of their political plans. The Chancellor’s predictions of real income growth were only true for those who wanted to believe him. In reality, he has contributed to creating a low wage economy growth that could become a political problem for the Conservative party.
George Osborne has broken every single pledge he has made. Can we afford to keep him as a Chancellor?