The excellent Simon Wren-Lewis, in Mainly Macro, is discussing the conservatives’ mistakes that have cost them dearly. Let’s take a look…
He calculates that:
- Austerity shrank the UK economy by a whopping 15.9 per cent, in the period between May 2010 and April 2018 alone.
- Brexit has cut the UK economy by three percent. That is lower than the Office for Budget Responsibility estimate, but predicts a larger impact by 2035 than the OBR suggests.
- The Covid-19 pandemic was hit hard because Boris Johnson’s government delayed lockdowns, and it’s important to note that his reason for this was completely false: he said he was trying to protect the economy, but in reality he was doing the opposite. The failure to adequately fund the NHS to reduce waiting lists subsequently had a further impact, keeping a significant proportion of the workforce out of work due to health problems. Still, Professor Wren-Lewis only suggests a 0.5 per cent impact.
But it doesn’t give a cumulative total. Instead, we get a table showing the impact of these events, year after year.
The greatest damage occurred in 2020, with a 7.4 percent impact on GDP. This year, Professor Wren-Lewis estimates the impact was only five per cent.
Households are now five per cent poorer than in 2010 as a result of government decisions, it estimates, losing resources worth £4,000 this year. The cumulative total since 2010 is a huge loss of £35,000.
The verdict is curse (my bold) :
A UK government enacting policies that reduce GDP by around 2% during its term is quite unusual. Reducing it by 5% is extraordinary, but since World War II we have not had a government that cut public spending in a recession when interest rates were stuck near zero, or one that deliberately elevated trade barriers with our largest market.
The way these numbers are constructed seems to be the consequence of three serious errors, but I think it goes deeper than that. What connects them all is gross economic incompetence. In each case the experience was ignored because it did not fit ideological or political objectives. As I have said a few times, mistakes made by politicians because they have followed the consensus of experts are understandable and to some extent forgivable, but mistakes made because politicians ignore the consensus of experts must be assumed by those politicians.
This propensity for conservative governments to ignore the economic consensus and, as a result, make very costly mistakes is not unique to this period… What is truly alarming is the Not learning from these mistakes, or even recognizing them as mistakes.. This is not just the natural reluctance of politicians to admit mistakes, but goes much deeper than that. The Conservatives have created, through the right-wing press, pressure on the BBC, think tanks and wealthy donors, an alternative reality for themselves, in which Disasters are seen as triumphs that should never be questioned.. That is why in this election they are pushing tax cuts despite paralyzed public services, refusing to acknowledge the costs of Brexit and where even pandemic-delayed lockdowns are seen as a mistake.
Consequently, as things are Any future Conservative government is likely to continue making serious economic policy mistakes that will cost the majority of UK households a substantial amount of lost income and resources..
So, so much for the conservatives. They are an electoral toast and they probably know it.
But what about the Labor Party, which has been reshaped in the image of the Conservatives and is likely to continue many, if not all, of the failed Conservative policies?
We know Keir Starmer will not reverse austerity.
We know that it will not reverse Brexit.
But people are convinced that he and his party are the only option to replace the conservatives they emulate. I would say I look forward to Professor Wren-Lewis’s analysis of Labour’s plans, but I doubt he will write one.
We may very well get rid of a misguided government on the 4th of July. But do we really have to replace it with more of the same?
Fountain: mainly macro: The macroeconomic cost of the conservative government
