Credit rating agency verdicts and the need to invest for growth

Last weekend we learned that one of the self-styled credit rating agency, Moody’s, had downgraded the UK ‘triple A’ credit rating. In itself this is no reason for immediate panic, but it is another negative external appraisal of our miserable government’s performance, following similar comments from the IMF in the autumn.

The hypocrisy of the government, and of George Osborne particularly, is breathtaking. They make stringent cuts, which particularly affect some of the poorest in society, while promising tax cuts for the wealthy. And at the same time, borrowing is going up, not down. At least Osborne has admitted that he won’t reach his target of removing the deficit by 2015, but clearly his approach isn’t working. Of course he won’t admit it – oh no, he will carry on with the same disastrous policy. It will be left to whoever wins the election to undo the damage, and without being complacent, Labour has a clear lead in the polls now. But that is for the future.

The alternative approach, advocated by Labour and proved to be effective by the Obama administration in the USA , is investment for growth. Instead of making cuts which inevitably lead to job losses, why not invest in new jobs and new infrastructure? Investment leads to growth, which is a far better way of reducing the deficit, because it helps everyone. Jobs and services are created, not cut, and the economy grows as a result. Sadly, there is little chance of Osborne et al seeing the light on this one, and it will be left to the next government to sort it out.

In the meantime, we have the Eastleigh by-election brought about by the fall from grace of Chris Huhne. It’s not the kind of constituency that Labour would do well in, so although we have an excellent candidate, I’ll be watching from the sidelines. Will the LibDems escape from the Rennard effect? It remains to be seen, but if the Tories win, the angst and soul-searching among the LibDems will be a sight to behold.

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