As the general election creeps closer, the economy is still the main focus of debate between the main parties. The economic battleground carries great weight in deciding the victor of elections. The last time Labour lost power to the Conservatives, it was Margaret Thatcher’s promise of a new approach to economic management that convinced the electorate to abandon a tired Labour doctrine.
Today, the fight is over cuts, regulation and future development, in the wake of financial turmoil. The Conservatives have taken the boldest action on spending reductions. With George Osborne (Shadow Chancellor of the Exchequer) saying £1bn could be cut now if child benefits for wealthier families were cut in conjunction with child trust funds. This though, is only the tip of the iceberg in the Tories’ plans to extensively downsize the state.
Labour have strongly criticised these spending plans. Lord Mandelson scathingly said, “This is the paradox of government thrift. We learned about it in the 1930s. It seems to be totally lost on the Conservative Party.” Labour believe that the danger of dipping back into recession is not being taken seriously enough by their main opponents, and that they will starve a recovering economy.
The Liberal Democrats have distanced themselves from the extremes of this debate of economic ideologies. They seem to be taking the most pragmatic approach, by saying that decisions on the public deficit must be focused on the behaviour of the economy, not on rhetoric. The other parties might do well to take a leaf from their book.
Having avoided giving specific answers on cuts, Osborne is now trying to move on from the well-worn topic of spending. He is suggesting that Britain should invest in a ‘green’ economy, after claiming we are “lagging behind” in the field. However, this is merely a minor part of his proposed, “new economic model for Britain”. The most interesting part of the ‘model’ is the plans to stop relying on debt to fuel prosperity, replacing it instead with higher savings for business investments. De-leveraging a UK economy that has become so dependent on borrowing will be no small feat, Osborne has certainly set himself a big challenge.
As ever, it seems the economy has the power to swing an election. The Conservatives have launched a new offensive; how the other parties respond to the plans might just make or break their campaigns.