Another nail in the coffin for neo liberalism in Britain (from the Guardian):
An extra £5bn of capital investment, funded by spending cuts elsewhere, will form the centrepiece of an overall £30bn national infrastructure programme due to be announced by George Osborne on Tuesday as part of an attempt to prevent the country from sliding back into recession.
The chancellor will unveil nearly 500 public sector projects, many of them to be funded by commercial pension fund investments.
Some of the £5bn extra capital investment over the next three years will go to a £600m schools programme to fund an extra 40,000 places by 2014.
To anyone with a basic understanding of econmics (and those not indoctrinated with neo liberal ideology) Osborne’s move was entirely predictable. Every serious economist who predicted the economic crisis back in 2008 has argued vociferously not to ram through austerity measures. A prolonged recession, rising inequality and unemployment were all completely foreseeable, yet the Tory government in Britain decided that ideology trumped reality and went ahead with their economic agenda believing rhetoric and spin would disguise their actions.
No more. Faced with the prospect of losing the next election due to their severe mishandling of the economy, the Tories are now getting in to the Keynesian stimulus business. Osborne may still talk about meeting his deficit reduction targets and continuing austerity measures, but as the economy verges on the edge of another recession, his boss has told him to forget the fancy theories and get down to serious economics that actually work.
It’s hard to trust the Tories on issues like this – they have a history of giving with one hand and taking with the other – but on the face of it, any investment in Britain’s infrastructure should be seen as a good thing. It’s just a shame they won’t admit their economic ideology has been proved defunct.