Osborne is killing our economy

CHANCELLOR George Osborne used to say that Britain being able to keep its AAA credit rating with agencies like Moody’s proved that his economic policies were on track. Now that rating has gone he has nowhere to hide. Whatever mess we are in now — heading fast to a third “dip” (we never climbed back out of the last two) is entirely his fault — and of course Cameron who gave him the job he was totally incompetent to handle.

Now they are both trying to claim that the drop in credit rating is no big deal — that the US and France in recent years have also suffered this drop in credit rating and it has done them no serious harm.

Business Secretary Vince Cable likened credit ratings agencies to “tipsters” and part of the “background noise we have to take into account”, suggesting they had a “pretty bad record” on economic and corporate forecasting.

The truth is that the drop actually helped the US, because it lowered the relative value of the dollar, making American exports a bit cheaper and a bit more competitive — and because the Obama government has invested in industry and they had something to export.

And in Britain the first effect of the drop in rating has been a big drop in the value of the pound. If we were the industrial manufacturing country we were in 1979, before the Tories took a sledge hammer to all of our major industries, this would be good news and it would be easier to sell our products abroad.

But as exports, if we had anything much to export, would be more competitive, so imports are going to be significantly dearer. That means the price of most of our food and fuel. It will cause price inflation in all our basic necessities, which of course will affect mostly those on low incomes.

Those who are bearing the brunt of the austerity measures — the working class — are going to get another economic kick in the teeth and for many it will be the last straw that pushes them over the edge of the abyss into total destitution.

Furthermore the drop in credit rating could also force up interest rates and that will have a nasty impact on everyone with personal debt.

Shadow chief secretary to the Treasury, Rachel Reeves, said if the downgrading affected the value of the pound — and it has — people could really start to suffer. She told the BBC: “I think the prospect of the pound being weaker is actually very bad news for the economic recovery and very bad news for families who are already struggling with rising gas and electricity prices, rising petrol prices, rising transport prices, and for pensioners as well who’ve seen those essentials go up it’s really, really tough for them right now.”

This will make any chance of an economic recovery in Britain much harder as people have less and less to spend on anything.

The credit rating agencies are calling for Osborne to increase spending on infrastructure projects to create jobs, and perhaps new council homes, and allow the working class a modicum of extra income so they can go and spend it and keep the wheels of the economy turning.

But Osborne is defiant he will keep on as before with his austerity measures — he is driven by ideology, not any understanding of economics. Sooner or later Osborne and his class will discover there is a real political consequence to their war of hatred against the working class — and it will be a lot more serious than just losing the next election.