The reason that Moody’s gave for downgrading the UK’s AAA status is that, although the Chancellor remains committed to sound public finances, there is precious little economic growth around to help him.
Quite simply, when you, or I or a government are deeply in debt, only two honest choices are available to us. We have to earn more or spend less.
Before this government was formed, many of us argued that there needed to be real and significant savings – what the BBC would call ‘deep cuts’ – in public expenditure. It would mean closing whole programmes, maybe even whole department, and focusing expenditure on only the top priorities.
But while politicians are very good at spending more, spending less does not come naturally to them. George Osborne figured that he could leave spending more or less unchanged, and that growth would rebalance the economy, leaving the state sector as a smaller, more affordable proportion of the whole. But that just hasn’t happened. Our customers in the US and EU are suffering, customers and businesses at home are sitting on their hands to see what happens, and people just aren’t making investments for the future.