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The UK could lose 1.3m jobs as a result of the Budget

Surprise, surprise! According to the Guardian, a private Treasury assessment of the planned spending cuts says that up to 1.3m jobs could be lost over the next five years. The Guardian says that it has seen a slide from the final version of a presentation for last week’s Budget, which says that: “100-120,000 public sector jobs and 120-140,000 private sector jobs assumed to be lost per annum for five years through cuts.”

This is in response to the coalition government’s decision to cut most spending department budgets by 25% after inflation over the next four years, with only health and overseas aid being protected.

The government would have us believe that the private sector will grow so strongly over the next five years that it will create 2.5m jobs. This is given the forecast that more private sector jobs are going to be lost than public ones, with a private sector reduction of up to 700,000 jobs over the next five years. If the private sector is to lose 700,000 jobs how is it going to create a further 2.5m? This is utterly ridiculous.

Public spending is being slashed. Government contracts to the private sector will be decimated. Where is the pull coming from for private sector expansion? The man in the street will have less to spend so why should firms produce more goods? They could export more – except for the fact that the rest of Europe is cutting back as well and the US may follow next year. On top of that, sterling is appreciating against the euro. Who is going to buy our goods?

As Brendan Barber, TUC general secretary said yesterday, this is “absurd”. He said: “This is not so much wishful thinking as a complete refusal to engage with reality. Much more likely are dole queues comparable to the 1980s, a new deep north-south divide and widespread poverty as the budget’s benefit cuts start to bite. Many will find that a frightening prospect.”

What reason did the government give for making such dramatic cuts? It was to reassure the markets. Are the markets reassured? No! The FTSE index has fallen 14% since April and in the last six trading days £100bn has been wiped off the value of leading companies. Analysts are saying that markets are on a “cliff edge”.

On top of this the numbers of police on our streets are to be cut on the same basis as all the other spending departments. All I can say is “thank God none of us will have anything left worth stealing.”

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Posted in Exchange Rates, government borrowing, government spending, sterling, unemployment

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