Archive |

Public sector strikes following George Osborne’s announcement

30 Nov

There is unrest in the UK today as public sector unions join in a one-day national strike, following announcements made by George Osborne saying restraints on public sector pay will be extended for another two years.

Mr Osborne, Britain’s chancellor of the exchequer, attributed the changes to the turmoil in the eurozone having a damaging effect on the UK economy. He said: “Our challenge is even greater than we thought because the boom was bigger, the bust was even greater and the effects will last even longer”.

The Office for Budget Responsibility estimated a fall in economic growth from 1.7 to 0.9 per cent this year, and below half of the 2.5 per cent estimated for next year.

Whilst economic growth falls, the debt-to-GDP ratio is forecast to increase.

The OBR predicted the country would have to borrow thirty three billion pounds more than forecast. However, the Labour Party’s finance spokesman Ed Balls thinks Mr Osborne would have to borrow an additional one hundred and fifty eight billion.

He described Mr Osbourne’s borrowing as a “miracle cure”, and suggested the government should adopt Keynesian economics. This would mean intervention in the form of government spending and tax breaks in order to stimulate the economy.

Mr Osborne stated that Britain has faced higher inflation, and Keynsian thinking seeks to kurb that inflation.

But Mr Osborne is adamant a reduction in public sector pay increases by 1per cent is what the government needs to meet financial targets.