Archiv für die Kategorie „US vs UK Growth“

US vs UK Economic Growth Policies.

Donnerstag, 10. Mai 2012

In the Sunday Times two weeks ago and following the strong showing of the opposition Labour party in the local council elections, Dominic Lawson (dominic.lawson@sunday-times.co.uk) wrote that Ed Balls the Shadow Chancellor was again urging the government to follow the policies being pursued in a rapidly recovering America. Dominic Lawson recalled, however, that in his column in February he had already pointed out that?.one slight embarrassment for those making this argument is that the public expenditure plans of the US government involve a cut, in real terms, at no less a rate than that proposed by the UK government.
An analysis of the alleged gulf between the US growth agenda and the British austerity approach had also been supplied the previous week by John Redwood, the chairman of the economic affairs committee of the governing Conservative party. This analysis indicates that total US public spending rose by 2.2% in 2011 and is forecast to rise by 3.8% in 2012 and by 2% in 2013. In comparison, public spending in Britain increased by 4.8% (2.2% for US from above) in 2010-11, by 2.9% (3.8% for US) in 2011-12 and is forecast to rise by 2.6% (2% for US) in 2012-13.
The conclusion of John Redwood from the above analysis is that?.if the contrasting performances of the two economies prove anything, it appears to be that an economy with a higher proportion of spending in total GDP with a higher level of public borrowing (i.e. the UK), performs worse than an economy with comparatively lower figures (i.e. the US). Underlying these figures, as Dominic Lawson points out, is the inherently greater vibrancy and flexibility of the US employment market, which allows employers to shed employees more easily in a downturn and, in turn, more rapidly recruit in anticipation of potential growth in the economy. This is a major difference between the US and especially the southern European states suffering most in the Euro-zone from the rigidity of their employment laws.
On the different approach to the British economy presented by the Labour party in the local council elections, Dominic Lawson summarized their economic alternative to that of the Conservative-led Coalition government as aiming to also cut the deficit ? but a tiny bit more slowly! Judging by the extremely low turn-out for the local council elections, it would appear that the average British voter is not convinced that there is any significant difference in the Labour plan for growth either.