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Doubts grow, not economy, under UK austerity drive

By David Stringer

Associated Press

Published: Sunday, Oct. 2 2011 10:40 a.m. MDT

Demonstrators protest near Britain's Conservative Party Conference, Manchester, England, Sunday Oct. 2, 2011. Jobs have been lost, libraries shuttered, sailors sacked and street lights dimmed _ Britain is beginning to taste the bitter medicine David Cameron warned was necessary to fix its wounded economy. It's left some wondering: Is the remedy worse than the symptoms?

Jon Super, Associated Press

MANCHESTER, England — Jobs have been lost, libraries shuttered, sailors sacked and street lights dimmed — Britain is beginning to taste the bitter medicine David Cameron warned was necessary to fix its wounded economy. It's left some wondering: Is the remedy worse than the symptoms?

As Cameron's Conservative Party gathered in Manchester Sunday for its annual convention, the prime minister faced a test of his resolve to tame the country's ballooning budget deficit — his key priority since taking office in May 2010 at the head of Britain's first coalition government since World War II.

Though the sharpest measures of a 81 billion pound ($126 billion) four-year program of public spending cuts are yet to bite, there are fears that the drastic action intended to slash Britain's debts has stalled the country's stuttering economic growth — a point of growing unease between the Conservatives and their left-of-center partners, the Liberal Democrats.

Figures released last month showed growth in Britain had slowed to 0.2 percent in the second quarter, diminishing hopes that the country's businesses can generate new jobs to replace public sector posts being lost under the austerity plan. In the last year about 250,000 public sector workers have been laid off, and the country's jobless rate was 7.9 percent in the period between May and July.

Cameron insisted Sunday that the government's plan would revive Britain's economy and leave the country on a sound fiscal footing.

"Things are difficult," he told the BBC, "but we need to explain to people what are we trying to build at the end of it."

Many Britons remain unconvinced. As the Conservative rally opened Sunday, 35,000 people — according to a police estimate — staged a union-organized march through Manchester, 180 miles (290 kilometers) northwest of London, denouncing the "Tory fat cats" and their cuts to public services and pensions.

Public sector workers plan to hold a one-day national strike Nov. 30 against the government's austerity plans. Mark Serwotka, leader of the PCS union, said it would be "the biggest strike in Britain in 80 years."

Though Cameron's uncompromising plan to trim spending has won the confidence of credit rating agencies, the International Monetary Fund has warned that the U.K.'s growth is likely to stall further.

Last month the IMF cut its growth forecast for the British economy to 1.1 percent this year from its previous forecast of 1.7 percent in April, and urged Cameron to slow down the pace of austerity measures should growth fall even lower.

"From almost day one they had an austerity plan, but they had no plan for growth," said David Blanchflower, a professor at Dartmouth College and a former member of the Bank of England's Monetary Policy Committee, who has long been critical of Cameron's plans.

Opposition to Britain's spending cuts has already boiled over into street protests, with public sector workers marching on Parliament and students angry over rises to college tuition fees engaging in violent protests, including an attack on a car carrying Prince Charles and his wife Camilla.

Analysts suspect riots which flared in August — when mobs of young people torched cars and looted stores in several English cities — were sparked in part by a sense of desperation among jobless urban youths.

As Cameron prepares to make a keynote speech to the Conservative convention on Wednesday, he must choose whether to press ahead with his austerity plan despite creeping public concern, or soften the program and offer measures aimed at kick-starting growth.

He signaled Sunday that he would resist calls — now coming from some within his own party — to change direction by introducing tax cuts or spending schemes.

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