The numbers just don’t seem to add up to me.
The Guardian today reveal that the Treasury expects that around 1.3 million jobs are to be lost as a consequence of the budget. Of these around 600,000 are direct public sector job losses with the rest culled from the private sector.
David Cameron insists, with chutzpah in Kathy Newman Alice Tarleton‘s words, that unemployment will befalling every year this parliament. This is a reiteration of what the Office for Budget Responsibility describe; a situation where jobs lost in the private sector are replaced, more than replaced, by those created in the private.
As Anthony Painter points out this means that net job creation must proceed at rates in excess as were enjoyed in the period 1999-2007. Let me reiterate, Cameron implies that our recovery from a catastrophic financial crisis – which usually tend to L shaped rather V shaped – will see a flurry of job creation not seen even during the longest boom the UK has seen.
There are ways out for Cameron, but none particularly convincing.
A contractionary fiscal position can be met offset with an expansionary monetary position; lower interest rates or quantitative easing, for example. But it looks as though we will be facing tighter, not looser, monetary policy in the near future.
Or we can trade our way to a boom, after all Stirling has plummeted, but every country is planning on doing that, and we can’t all run trade surpluses.
Businesses can be impressed by tough measures and they can boost their confidence, of course that hasn’t happened and confidence is down.
Alternatively, Cameron is just making over optimistic prediction. This is something which he lambasted Brown for while in opposition but seems to have embraced once ensconced in the seat of power. Both the private sector and the Trade Unions are dubious of Cameron’s predictions and they can add my voice to their incredulous calls.