Business in Britain has played along with Labour. It has had little choice as more and more of the economy came under state control. Many businesses developed a strategy of "liberating" as much money as they could from the Treasury by selling the Simple Shopper (© Wat Tyler) goods and services. But the love affair (if such an abusive relationship can be characterised as such) is over.Luke Johnson's piece in the FT yesterday is damning:
It is hard to comprehend how much damage Labour has done to our economic prospects ... The most damning statistic is the following: the state’s percentage of gross domestic product in Britain has risen from about 38 per cent in 1997 to perhaps 52 per cent today. Funding this vast amount of public largesse means the UK borrows 25 per cent of all its state spending. Clearly the country is living beyond its means.
We bloggers have been saying so for a while, Luke. We have also been saying this;
This expenditure is significantly funded by foreign buyers of UK government bonds. They can see that this deficit is unsustainable. Sterling’s weakness on foreign exchanges in the past 24 months testifies to international concerns about our economic prospects. If investors are not convinced that serious austerity measures are in train, then they will demand a higher coupon on any British debt they buy. And the one thing Britain cannot afford is higher interest rates.
The UK has huge amounts of debt: household, corporate and government – much of it floating. Only ultra-low interest rates are keeping the economy alive. If base rates were to rise from the current 0.5 per cent to still modest levels of 4 per cent, then consumer spending would plummet and thousands more companies go bust. Unemployment would soar and tax receipts would drop sharply. We would enter a severe, second recession, and living standards as a whole would fall.
Finally, we have also been saying this (and have been called wingnuts for our trouble):
Labour is an entirely fraudulent organisation that pretends to believe in business, then buries it in bureaucracy and tax. Five more years of Gordon Brown would leave Britain an economic wasteland.
If it hasn't already, dear chap. So business has caught up with the blogosphere. About time too.