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Questions hover over the announcement of massive public spending cuts.
But even if you accept that deficit reduction is necessary, is it necessary to do it now? As in the United States, the economy to which it is closest, Britain enjoyed very modest economic growth earlier this year, the result of various stimulus packages put in place following the banking crash. Like in the U.S., that period of growth is slowing to an absolute trickle. In August there was a slight rise in new claims for unemployment insurance. Business confidence surveys, positive earlier in the year, have reversed themselves. The property market has also gone into reverse with prices for houses — the main source of personal wealth in this country — falling by a little more than 3 percent nationwide in September.
So a number of questions hover over today's Osborne speech.
First, the Ireland paradigm: When the bubble burst Ireland was hit harder than any EU country. It had just crawled out of recession when its government embarked on draconian austerity measures to reduce the size of Ireland's deficit, slashing the size of goverment, throwing thousands out of work. The result: Ireland is back in recession. Will that happen in Britain?
Second: How many jobs can the private sector generate over the next four years? Can it find work for the 1 million newly unemployed projected by PriceWaterhouse?
The third question is more general and applies to all countries grappling with debts and deficits unprecedented since the Great Depression. How do you address the mismatch in skills between most of those who lose their jobs and the available work programs governments can afford, like infrastructure projects?
Since the onset of the crisis there have been many articles talking about the great federally funded projects of the 1930s in America, such as the WPA. But could modern workers — who have spent decades working in offices — really build a Hoover Dam or Glacier National Park's Highway to the Sun?
Osborne announced plenty of new apprentice schemes and funding to train people to start and run small businesses. But that still leaves the government as the ultimate source of funding.
The true impact of today's announcement won't become clear until next spring.
If the gamble pays off and the deficit starts to fall and the unemployed find work quickly (they have to pay taxes to make that deficit come down) then the coalition government will be in power until the end of the decade. Deficit hawks in America will be able to point to Britain's example and probably succeed in making their slash and burn intentions toward government mainstream policy. If the gamble doesn't work, George Osborne, who said his public spending review restored "sanity" to the public finances, will find himself hoist by his own petard and very likely in the opposition once again.
Even so, I don't imagine the deficit hawks in America will change their minds.