Goodbye To All That

Listening to the Budget on Wednesday was depressing to say the least, the extent and level of Government borrowings and the blatant lies about the recovery of the economy weren't the best way to spend a lunch hour. It seemed to me that Alastair Darling was trying to set a record for the most words spoken in the shortest time, I think most people were expecting a much longer speech than the fifty odd minutes we got.

It struck me, as I sat there making mental and physical notes about the GDP, borrowing etc, that we have truly reached the end of the golden age that began back in 1951 with the end of the first period of post Second World War austerity. The novelist Robert Harris has long maintained that the one thing that people born post Second World War really needed to put things in some sort of perspective was a war. Now I'm not advocating that at all but I can't help thinking that, poverty aside which I have posted about before, the majority of people in this country generally have more money than they actually need. The expression 'you've never had it so good' is true, we haven't. The post WW2 rebuilding left this country in a position of strength and subsequent generations, three of them, have reaped the benefit. From shopping for the fun of it through to treatment on the NHS we live in a Britain that our Great-Grandparents couldn't even have dreamed of and now it seems that the land of milk and honey is going to be a little less forthcoming when it comes to dishing out the goodies.

Government borrowing levels are truly horrendous, I can't think of any other way to describe them, greater than all the borrowing of all the previous Governments added together. The Conservatives will win the next election but it is the one after that which is going to be important. If the current recession lasts until 2013-14 then action will have to be taken shortly after the 2010 election to make sure we don't go through another boom and bust cycle.

It's no good pretending that the economy will be back in 'safe hands' either, circumstances conspired to put Mrs Thatcher in exactly the right place at the right time when she won her second term in 1983, the Falklands War helped the general morale of the country and increasing North Sea Oil revenues helped bolster the economy. However good everybody felt during the Maggie years the downside to all the smiles and champagne was the fact that unemployment rose, the growth in annual revenue was lower than that in Germany, Japan and the U.S, manufacturing levels fell by 14% and the GDP fell by 3.2% during her first period in office. Between 1979 and 1981 the U.K lost 25% of its manufacturing base, something we have never recovered from, whilst emphasis was put on service industries, especially the financial services sector which saw the rise in 'invisible exports' which to this day the country has become over reliant on. And of course being Conservative the greatest tax breaks under Mrs Thatcher were given to the richest, they saw their tax burden fall from 52% in 1979 to 36% in 1989, some of us did however share in the new found prosperity and overall incomes increased by 37% between 1979 and 1992, the downside being that the number of people in families earning less than half of the average income was 5 million in 1979, but was 14.1 million in 1992. And by 1987 almost 20% of the children qualified for free school meals.

We can't go through a similar social upheaval again, it will ruin what is left of this country, the Conservatives cannot be the party of those who are well off, it must be inclusive or it will be as treacherous to the people of this country as the Labour party has over the past five years or so.

When the Conservatives finally lost the plot in the mid-eighties they left the economy in a reasonable state, albeit one which was hugely dependent on people moving away from state funded health and education, but they also left a legacy which cannot be corrected - the decline of the U.K as a manufacturing base. We now have a country where 72% of the working population do a job which doesn't involve manufacturing of any sort.

The mad rush to privatise every utility that moved hasn't left us with slimmer, more efficient industries, it's left us with company's who still have a monopoly on certain services - water for example - and no sign of any improved service. The high bonuses, 'greed is good' years of the last Conservative administration cannot be allowed to return to this country any more than the ruinous folly of the current Labour administration should be allowed to continue. The constant swapping of one extreme to another doesn't help anybody, either individually or collectively.

Of course we could still find ourselves falling victim to the worst of all possible outcomes: the AAA Sovereign Credit Rating could be lost - it's more than just a possibility given that the country is going to see its national debt rise to £1.4 trillion over the next five years - and we will find ourselves well and truly among the impoverished of Europe, down in the Championship along with Spain, Ireland, Greece and Portugal - the four basket cases of European economics. It is this possible downgrading that will undoubtedly be troubling the opposition front bench, the old Conservative stand-by of tax reductions for the wealthy simply won't be possible - taxes will have to go up, considerably as the cost of borrowing increases, interest rates will have to increase and the short term impact will be another contraction of the U.K economy - you only have to look at the situation facing the gilts market over the next two months of this years second quarter to know we are fastly approaching the point on the map where it says 'here be dragons'.

When people use the expression 'Austerity Britain' they are really reaching for a life raft in a sea of uncertainty. The period of austerity between 1945 and 1951 came at a time when the country was on its knees following a war, we had to rely on America to bail us out financially, and rationing was still in place. We are not in that situation now, whilst as a country we have mind-boggling levels of personal debt we still have levels of personal income that bear no resemblance to those our forebears earned, we have a higher proportion of families where both parties work and savings levels that are at an all time high.

One of the few comments about David Cameron to emerge this week is that he won't make the mistakes of previous administrations, everybody believes him when he says that because let's face it the last thirty years have seen the very highs and very lows that anybody in their right mind wouldn't wish again.