Bleeding UK economy needs new physician: Economist

An economist tells Press TV that austerity measures have made the UK economy “continuously bleed” over the past years, adding that a “new doctor” is called for to address the predicament.

In Britain, tens of thousands of public sector employees in Britain have walked off their jobs to oppose the budget unveiled by Chancellor of the Exchequer George Osborne. The budget has been delivered to lawmakers in parliament. The growth forecast for 2013 for the UK is now cut in half by Mr. Osborne to 0.6 percent and he also said that recovery for Britain may not really pick up until 2019. Prime Minister David Cameron said he agrees that spending cuts are the only way forward even though for the past four years austerity has resulted in no recognizable recovery or job creation.

Press TV has interviewed Shabbir Razvi, economic commentator, London about this issue. Joining him is Ian Williams, political commentator from London. What follows is an approximate transcript of the interview.

Press TV: Before we get in to this new budget that George Osborne has presented and this would be his fourth - How would you rate his previous three, especially the impact it's had on economy?

Razvi: As you quite rightly said this is his fourth budget; it's a lackluster budget; it's a budget really in favor of the wealthy - corporation tax has been reduced, national insurance contribution is also being reduced for the employers. And the rhetoric, the political rhetoric, hasn't changed.

Mr. Osborne is continuously bleeding the economy, destroying the nation. In the last four years he had huge opportunity of creating an infrastructure whereby the economy would have grown by house building, by infrastructure investment and so many other investments that could have created employment. However, the only measure that he has gone for is to austerity, austerity, austerity.

So, really the last four years has been a completely wasted period of this chancellor and there is a debate within the conservative party and the coalition whether Mr. Osborn is the suitable chancellor for the UK.

We don't know what is likely to happen in the next year or so, but certainly the omens are not very good for the British economy. All the economists are saying and all the commentators are of the view that this austerity sort of hype, this austerity drug, which is being given to the patient, is actually killing the patient and we need a new doctor to administer new medicine to the British economy.

Press TV: I should mention there was a recent poll that was held by ITV news in which more than 4 out 10 participants believe Osborne should be sacked.

You talk about how he has bled the economy - Can you give us some examples of how he's done that?

Razvi: As I said in my opening comment what has happened is that unemployment has gone high because obviously the economy is not growing, employment is not being created therefore we have high unemployment.

The second thing, which is being done... I mean, in the last month or so there has been a debate about bedroom tax where those people who are either on social security or on disability allowance, because they've got an extra room they have to either take up tenants or rent it out or have to give up those premises and move to a smaller unit - that is a second way that the economy is bleeding.

And everywhere that one sees, it's the working people who are paying for what the financial services sector has inflicted on the UK. And as far as the bonus culture goes we are in March 2013, bonuses have been awarded to bankers in the same manner as in the past.

So there is a whole host of issues on the one hand where you have the poor, the working poor are being continuously squeezed while the upper echelons of society, the one percent, either their income tax has been reduced from 50 percent to 45 percent; as I said corporation tax again is going to be reduced. All the measures are really for the benefit of the rich and wealthy.

Even the political phrase that is quite often used is that those people who create employment - what our friends who are ruling our country at this moment fail to tell the world is that they're really the party of the rich because they themselves come from a background of being posh boys who are only interested in protecting their class of people rather than the ordinary workers.

So that is where the situation is leaving us at this moment.

Press TV: So he's cut benefit to the poor; he's cut wages; he hasn't really created that many jobs because he has cut thousands of jobs from public services and the civil service. So these are all perfect ingredients for the economy not to move forward.

Is there silver linings anywhere that is going to show that the economy is going to move forward?

Razvi: There are a number of measures that can be taken, but as far as I can see for the last three to four years since the coalition government came into power, if there were any silver lining it has disappeared from the horizon very rapidly.

The only way we can really create more growth in the economy like all the economists and all the commentators are saying there has to be some stimulus in the economy. Not just spending money for the sake of spending money, but building schools, housing - housing is one of the very important factors in the UK. We used to build over 200,000 houses even 30 years and we build hardly 20,000 units in the UK now. So that puts pressure on the ordinary people because rents are very expensive.

All these kinds of activities would certainly create more employment; it will reduce people claiming social security - so as soon as they start working they will get salaries and those salaries will contribute to taxes and so on; the treasury will have more money and therefore we will be able to spend more money to grow the economy further.

Press TV: Our guest Ian Williams says people are too lazy to work especially in times of recession. How does that read into what we've been discussing regarding the UK's economy?

Razvi: I live in London, I've lived all my life in London. I don't see people are lazy at all in fact there is enough evidence to show that British workers work longer hours and take less holidays than there counterparts in other developed countries. So the issue of laziness...

I think Mr. Cameron and his team with Mr. Guppy - recently in an article in The Spectator defined the ruling elite in the UK as the 'elite of clowns'.

We literally have clowns who are ruling our country. They're not interested in ordinary people; they're just interested in their own clique and to create more benefit. Is Mr. Osborne and Mr. Cameron saying that the rich and wealthy really work harder than the ordinary people? Yes.

It is often said by the liberal economists trying to tell us and make us believe that it's the rich and the wealthy who work hard to create employment for ordinary people, but the reality of the situation is that the rich and the wealth would not be the rich and the wealthy if the ordinary people were not working to the maximum so that their profits could increase and hence they could buy larger yachts and have 3 or 4 holidays out of the UK and making Britain more of a sick economy has time goes by.

As my colleague from New York said we are not far behind Greece and Cyprus; however the situation is that because our economy is based on the financial services sector and on the service sector, when the problem hits the UK it will be even more colossal and more epic than has happened in Greece and Cyprus and other Mediterranean countries.

Press TV: Is it really the case that the majority of British children grow up in families struggling below the breadline because these welfare cuts, tax rises and wage freezes...? Is it that dire?

Razvi: We have a narrative at this moment, which is really defining a certain class of people a certain group of people as 'working poor'. What that means is that there are people who are in employment; however, they do not earn enough money to be able to afford the necessities of life.

They may not be poor in the classic sense that they don't have food on their table, but there are challenges and quite often especially as we had a very cold winter here, sometimes people have to choose between either heating the room or putting food on the table. Choices like this make the situation very difficult for the working people.

Press TV: What percentage of the population do you think is facing that?

Razvi: At this moment we've got two and a half million people unemployed; it is said that about 6 million people, even those who are working are 'working poor'; and we have a working population of 26-27 million. In my estimate you're talking at least about 25 percent of those working people are in that kind of a situation. So we have a very difficult situation for ordinary working poor in the UK at this moment.

Press TV: Why has the UK government failed to offer job creation?

Razvi: The reason is political and it's ideological because at the end of the day if the coalition government was interested in the betterment of the economic situation in the UK generally, then they would abandon the ideological to administering an uplift to the British economy.

We've had four years of austerity and it is abundantly clear that it is not working. It requires the government to abandon it completely so that we move to a different plateau whereby the economy can start growing.

Other than that we could see... even Mr. Osborn has said that recovery may not happen until 2019 - so we are talking 5 to 6 years away. Now, that's a long time for people to suffer.