Originally published @ 1:19 am, Fri 15th Jan 2010
George Osborne’s warning tonight that he intends to cut next year’s budgets for public services – in year – should be salutary to us all.
Cutting public services before the economic recovery is secured risks a double-dip recession.
Yes, the debt built-up will have to be dealt with, cos interest rates in the future will start to grow at some stage, and the cost of servicing the debt will grow.
And in 1997, we worked hard to get the cost of public debt down to allow more spending one services.
It’s where we’ll want to be again in the future.
But debt was used to do a job – to keep businesses going, to keep people in work, to keep families in homes.
And it worked. It’s calculated unemployment would be at least 500,000 higher if the classical economic policies had been followed.
More businesses and more people, in work will help us halve the debt in four years. To go faster will risk a double-dip recession.
And all our public services will have to re-cast spending in-year. Not easy if employment levels have already been committed to for the year. And drastic cuts will be harder to achieve cos redundancies carry a cost that’s hard to recover.
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