The UK government declared an end to a decade of austerity Wednesday (4) despite the economic uncertainties of Brexit — a spending pledge that saw the opposition accuse it of “electioneering”.
Finance minister Sajid Javid’s promise of more money on “people’s priorities” came hours after prime minister Boris Johnson proposed holding a snap election on October 15 to resolve the political impasse over Britain’s scheduled departure from the EU two weeks later.
“We can now afford to turn the page on austerity and move forward from a decade of recovery to a decade of renewal,” Javid told parliament.
“We can now afford to spend more on vital public services,” he said to jeers from opposition MPs.
Javid said he intended to raise government spending by £13.8 billion ($16.8 billion, 15.3 billion euros) on health and education and to put more police on the streets.
The figure represents around 4.1 percent of Britain’s gross domestic product — a relatively large sum that Javid said the government could now afford.
“Even with the extra spending, we are still meeting the current fiscal rules,” he said.
“While our biggest challenge a decade ago was getting the deficit down, our biggest challenge today is getting our long-term economic growth back to where it was.”
Britain and most other major economies plunged into an extended economic crisis 12 years ago.
The country was headed at the time by the “New Labour” government of Gordon Brown.
The Conservative-led governments that have headed Britain since 2010 responded to the global financial crisis by keeping to strict budgets that slashed public spending.
It has since enjoyed a period of slow but steady growth that is being increasingly threatened by Britain’s twice-delayed split from the other 27 EU nations.
The economy unexpectedly shrank again in the second quarter on investor worries over the prospects of Britain crashing out without an agreement with Brussels over how to unwind nearly half a century of intricate trade ties.
It marked Britain’s first economic contraction in seven years.
But Bank of England chief Mark Carney said Wednesday that the country was more prepared to deal with the impact of a “no-deal Brexit” than previously forecast.
Carney said in a letter to parliament “that the appropriate set of assumptions to underpin a worst case scenario would now be less severe than those used in the disorderly scenario published in November”.
The Bank of England’s updated no-deal Brexit forecast still made for grim reading for Johnson’s team.
Carney said unemployment would nearly double to 7.0 percent from the current 45-year low of 3.8 percent.
He also predicted an “an initial peak-to-trough decline in GDP of 5.5 percent”.
That figure was down from the earlier 8.0-percent estimate.
Labour’s finance spokesman John McDonnell accused Javid and the Johnson government of engaging in “grubby electioneering”.
Javid and Johnson are “pretending to end austerity when they do nothing of the sort,” McDonnell said.
(AFP)
