The Great Debate UK
How the government is really helping the UK economy
The government’s latest plan to boost growth by relaxing planning permission rules has attracted a mixed reaction. In fairness, allowing homeowners who have detached houses to build an 8 metre long-extension is never going to get the UK economy out of the bolt hole it has found itself in. Likewise, the perceived U-turn on the plan to build another runway at Heathrow is unlikely to happen in time for Cameron and Osborne to take credit for the growth boost.
But all is not lost for the government. All it needs to do is to continue its policy of gently loosening the Treasury’s purse strings. “But we are going through a period of fiscal austerity,” I hear you cry. Indeed that is what the government wants us to think, but the economic data just doesn’t support that assertion. The latest GDP data reported that government spending was flat in the second quarter. That is down from the large 1.9% increase in the first quarter. However the UK’s fiscal consolidation effort looks fairly meagre when you consider that government spending has only fallen once in the last six quarters.
Home extensions or no home extensions can’t compete with the purchasing power of government when it comes to boosting the economy. Thus, if the government decides to loosen its fiscal targets at the Autumn Budget statement in November (even at the risk of losing the UK’s triple A credit rating) as some believe is likely, the UK economy could be in a good position for 2013.
But is that really a good economic move for the long-term? Most politicians in Western Democracies know that we can’t keep up the level of public spending or debt accumulation we have been used to. However, not that many are willing to tackle the problem head on. The UK government has bucked this trend, and staked the Chancellor’s reputation on reducing our debt levels and dependency on public spending during this parliament. Osborne is finding out the hard way that it’s easier said than done to take things (read benefits) away from people who are used to them. He found this out to humiliating effect when he was booed at a Paralympics medal presentation ceremony.
from UK News:
Decision time at Heathrow
The government has approved the third Heathrow runway, in the interests of jobs and British competitiveness.
The third runway -- something airport operator BAA pledged it would not seek if it was granted permission to build Terminal 5 -- will open up a sharp political divide, with several Labour MPs, the Conservatives and Liberal Democrats opposed to the idea.
