Britain’s chancellor George Osborne said on Sunday that he intends to continue with his austerity program even if the economy is hardly recovering. Labour’s Ed Balls was critical but also said that he would largely accept the government’s savings if the next election returns his party to government.
Osborne appeared slightly optimistic about Britain’s economic prospects on the BBC’s The Andrew Marr Show, pointing out that unemployment is down and the economy is growing, even if it was still 3.3 percent smaller during the first three months of this year than it was in early 2008, before the start of the financial crisis.
“I think we can turn this country round,” he said, “but we’ve got to stick at the economic plan. That is, reducing our debts, making our businesses more competitive, helping to create jobs, making sure Britain can win the global race.”
Osborne is due to deliver another £11.5 billion worth of spending reductions next week for the 2015-2016 fiscal year.
Labour’s shadow chancellor Ed Balls has long disparaged the policy, describing cuts as “heartless” and “unnecessary.” During an appearance on the same television program on Sunday, he lamented, “Far from healing, the economy’s been flatlining for three years.”
But he also said the left would adhere to the coalition’s budget plan if it is elected to government in 2015 except for housing and infrastructure spending which he believes should be raised to encourage job creation. “On day to day spending, we’re going to be very tough,” he promised.
The “cuts” Balls derided have actually been reductions in planned spending increases. Britain’s ruling Conservatives and Liberal Democrats have reduced the shortfall by a third in the last three years while public-sector spending in real terms continued to rise. Borrowing last year was higher than in the year before. The Treasury expects to spend £756 billion by the time of the next election compared with £683 billion in 2012.
Osborne has had to extend his deadline for reducing the national debt as a percentage of national income from the next election, scheduled for 2015, to the 2016-2017 financial year but it will still need to come up with more than £10 billion in cuts to meet that target.
Health care, international aid and, for the most part, schools will remain exempt from spending reductions, however. “We call them ringfences,” said Osborne, “but they’re actually the public’s priorities.” They also account for 34 percent of spending this year, up 1 percent from last year.