Austerity

To judge by the articles and opinion pieces in various newspapers, you would be forgiven for thinking that the clock had been turned back to the late 1940s. That there would be food rationing, petrol coupons and queues of starving orphans lining up outside the church doors begging for scraps of food. We are told that this country is in the grip of austerity. That spending on services for the needy were being cut to the bone.

These articles are scaremongering nonsense of the very worst kind. Yes, the current government is reining in spending. But it is not cutting it, only limiting its growth. During the last Labour government, and particularly since 2000 when Gordon Brown abandoned the previous government’s spending plans, the state was allowed to expand exponentially as the worst prime minister of recent years acted like a demented Santa Claus throwing hard-earned taxpayers’ money at our public services (particularly the NHS and the DSS) in the belief that if you see a problem, throw money at it and it will go away. He got away with it when the economy was healthy and tax revenues high, but the whole plan fell apart in 2008 as the country collapsed into the worse bust it has since since the 1970s, if not earlier.

If you want to see real austerity, go to Spain. I have just come back from the area around Marbella, which has a lot in common with Elmbridge. It is an area popular with wealthy people of all nationalities. There are high value houses on private estates guarded by automatic entry barriers. The shops tend to supply the needs of the monied classes – designer clothes, jewellery, perfume and soaps. Until about 4 years ago there was a thriving property market whihc seemed to be on a permanent upward trajectory, and property developers fell over each other as they fought over available land to build upon.

Eventually the market was saturated with developments and the prices began to fall, slowly at first but eventually they fell off a cliff. One property, originally bought by its now bankrupt owner for E1,600,000 is now being flogged off by the bank which repossessed it for half that sum. Across the Costa del Sol, half built developments lie abandoned and are attracting the attentions of the spray can brigade. The banks which funded the expansion now sit on mounds of toxic debt. British expats, who came out for a retirement in the sun, have been forced to sell up at rock bottom prices and move back home as the increased value of the Euro against the pound has ravaged the value of their pensions (paid in sterling) to such an extent that they can no longer afford the lifestyle. This has a knock-on effect on the industries which served this community – restaurants closing, estate agents going to the wall and a whole parade of shops in up-market Puerto Banus closed, apart from one solitary survivor, a hairdresser. Those traders who supply a need which is essential can survive, provided they cut their prices. The big chain designer shops are still there as their earnings in those parts of the world not in recession can be used to trade through Europe’s difficulties. The independent trader selling non-essential goods and services faces ruin.

That is true austerity. In Cobham there are at present only 2 empty shops. Normally, these find tenants very quickly. This country is in a far better state than Spain, and this is largely due to the fact that we have control over our currency, our interest rates and our taxation levels. Spain, as part of the Euro and potentially in need of bailouts from the ECB (and therefore in practice from Germany) enjoys no such control. As Greece has already discovered and as Spain is beginning to appreciate, losing your own currency leads to forfeiture of your national soul.

Back in the 1940s, when the UK genuinely faced austerity, this country’s leaders believed that the only way to survive the post-war slump was for the Government to run everything – all the major industries and all public services –  from Whitehall. This led to the programme of nationalisation which continued until the 1980s. The tragedy for Spain is they too will find that their entire country is being run for them, but not by their own people or their own elected government. They will be answerable rather to the European commission, and to the German government which will insist on southern European countries following its impositions if the financial tap is not to be switched off. That such a proud nation, which in the sixteenth century bestrode the New World and the Old, should be reduced to the status of a vassal state, is truly depressing.

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