Austerity for 10 years as no 'quick fix' for Britain, Reform warns
Britain needs 10 years of austerity to fix its economic problems, a leading think-tank has warned as it questioned Coalition plans to restore growth by unleashing a building boom and urged George Osborne to stick to his spending cuts.Painting a bleak picture for the recovery, Reform said that "slow growth is inevitable given the levels of debt in the economy". It added: "Even under the best economic scenario, the programme of austerity should be at least a 10-year project with the first parliamentary term achieving deficit reduction and the second consolidating the gains."
Declaring "austerity is the new normal", the think-tank stressed that the Government "must avoid the temptations of quick fixes and inconsistency" if it is to attract the business investment that will drag the country back to health.
"There is a view that the recovery from the financial crisis should have been largely instantaneous and painless. But this is clearly unrealistic," it said. "An excessive emphasis on quick fixes – prioritising immediate wants while postponing hard decisions – is one reason the UK economy is in the mess it is in. Inconsistency increases uncertainty and uncertainty reduces firms' incentives to invest and expand."
In its paper, The Long Game, Reform argued that there is little the Chancellor can do to stimulate the recovery bar holding a strict line on fiscal discipline, simplifying taxes and regulations, and maintaining consistent policies. Patrick Nolan, chief economist, said: "Mistakes made over the last decade mean that the UK now needs to go through a period of low growth." more
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