Douglas Carswell's Blog

The Chancellor has it 180 degrees wrong

The Chancellor has an article in today's Telegraph designed to reassure us about the government's approach to the economy and the Eurozone crisis.  It manages to do the precise opposite.

The Chancellor begins by going on about the UK's "safe haven status". Because the government is dealing with Britain's debts, he tells us, the government is able to borrow at record lows. 

Gulp.  The government is dealing with public debt by increasing it.  The Coalition is set to borrow more in the five years of this Parliament than Gordon Brown managed in thirteen.  The cost of borrowing is low not so much because investors are putting their money into the UK, but because of the three card trick known as “Quantitative Easing”.  The government is in effect printing money, handing it to banks, and buying up government bonds with it. Spot the potential flaw?  

Even more misplaced is the Chancellor's insistence that the Eurozone is to blame for our dire economic performance.  Switzerland, which does more than four times more trade with the Eurozone than we manage, is growing.  Her economy expanded at a healthy 2 percent year-on-year in the first part of 2012.  The idea that it is all the fault of the Eurozone is demonstrably wrong.

It is not the Eurozone crisis that we should blame for our awful economic performance, but the almost total absence of domestic economic reform, coupled with the Treasury's absurd belief that monetary stimulus can engineer growth.  The longer our economy stagnates, the clearer it becomes that monetary stimulus is no more effective at generating prosperity today than fiscal stimulus was in the 1970s.

The Chancellor tells us that he wants our trading partners in the Eurozone to prosper.  Indeed, we all do. 

So why on earth is the Chancellor doing all he can to encourage them to remain trapped in a recessionary mechanism?  If the Chancellor does believe the Euro to be a burning building with no exits, why not help the neighbours escape?

The sooner that our trading partners leave the Euro, the sooner they can return to prosperity.

The Chancellor concludes by saying that thanks to the government’s "referendum lock" more power cannot be passed to Brussels.  I can think of many occasions over the past two years when I have had to vote in the House of Commons to try to prevent the government making precisely such power transfers.  The referendum "lock" somehow did not seem to apply.

On some of the major issues of the day the Coalition government has simply got it wrong. They are recycling old Gordon Brown-era Whitehall thinking. Old remedies are used to treat new circumstances. It is not working.

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