George Osborne carries the Budget box, March 2012. Photograph: Getty Images
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Mehdi Hasan on why Austerity isn't working -- but no-one in the government is listening

There's nothing wrong with saying "I told you so".

Yesterday I returned to London from a family holiday in the United States - where a small stimulus has led to a growing economy and 25 consecutive months of job growth - to discover that the British economy has now re-entered recession, after shrinking a further 0.2 per cent in the first quarter of 2012. Or, as the Tory-supporting Sun put it on its front page today:

Official: Dip's a double

Don't say we didn't warn you. In fact, don't say I didn't warn you.

If any further evidence was needed that austerity isn't working, that cuts don't work, that George Osborne is a "kamikaze chancellor", this is it. Critics of the New Statesman's economics editor, David Blanchflower, must feel rather foolish right now. Once again, Blanchflower and the Keynesians are vindicated while Osborne and the Austerians are humiliated.

Surveying the empirical evidence from across the continent, Yahoo finance blogger Henry Blodget put it best:

IT'S OFFICIAL: Keynes Was Right

Blodget explained:

Now, this is not to say that the global debt-and-deficit situation is not a huge problem. It is. It is merely to say that, of the two painful ways to work our way out of the problem – "austerity now" or "stimulus now and cuts later" – the second one seems more effective.

In other words, based on the experience of the last five years, it seems that Keynes was right and the Austerians are wrong.

As I said, none of this should really come as a surprise to anyone as all of this was predictable - and predicted. As Paul Krugman has noted:

It’s important to understand that what we’re seeing isn’t a failure of orthodox economics. Standard economics in this case – that is, economics based on what the profession has learned these past three generations, and for that matter on most textbooks – was the Keynesian position. The austerity thing was just invented out of thin air and a few dubious historical examples to serve the prejudices of the elite.

And now the results are in: Keynesians have been completely right, Austerians utterly wrong – at vast human cost.

But the Austerians won't give up without a fight. They seem to have two tactics. The first is to blame the lack of growth on anything other than the cuts - be it the euro crisis, the weather, health-and-safety regulations, the family dog, etc, etc. Yesterday I tweeted this quote from City AM editor Allister Heath, from June 2010:

The years ahead will be very tough - but there will be no double-dip recession made in Downing Street.

Heath responded with this tweet:

Unfortunately, I underestimated this government's competence and commitment to supply-side reforms. They haven't delivered.

Good of him to say so. But "supply-side reforms"? Er, the UK economy, like the global economy, is suffering from an epic lack of demand. Households aren't spending, banks aren't lending, companies aren't investing. "Red tape" isn't what's behind the record rate of unemployment or the absence of growth and confidence. The main reason why the UK economy contracted in the first quarter of this year is because there was a 3 per cent decline in the construction sector - driven, of course, by the Chancellor's crazy decision to slash capital spending.  

Even Heath's fellow Austerian, the Telegraph's Jeremy Warner, grudgingly acknowledges this point today at the end of a desperate if heavily caveated defence of Osbornomics and "consolidation":

When companies won’t borrow to invest, there’s a strong case for governments to do so in their place. And yet when you look at where the axe is falling hardest, it is on government investment – spending on schools, hospitals, roads, bridges, affordable housing, and so on. This is the easiest thing to chop, so that’s where the coalition has acted first.

In fact, this form of state spending should be doubled, tripled or even quadrupled. . .

Hear, hear!

The second tactic is to pretend that those of us who draw attention to the political and economic significance of this double-dip recession are somehow "enjoying" or taking "pleasure" from the catastrophic (lack of) growth figures. I've had lots of tweets from Tory trolls using this line of attack. This isn't just nonsensical and offensive but a brazen and desperate attempt to try and divert attention away from those damning figures, which deserve highlighting, and away from the Austerians in Westminster and Fleet Street, who deserve criticising.

We're also told by the cuts-defending Austerians that it is "irresponsible" to talk down the UK economy. But I, for one, won't take lessons in "responsibility" from those who happily, shamelessly and opportunistically talked down the economy when they were in opposition, going so far as to claim that the UK was on the verge of defaulting on its debts and making ludicrous comparisons between the British and Greek economies.

One of the presenters on ITV1's Daybreak programme tried this "You're far too pleased about the recession" tactic this morning, in an interview with Ed Balls. The shadow chancellor's response, however, was spot on:

Interviewer:  Well let’s talk about that then, talk about the recession, we are in a double dip recession, I guess you’re sitting there saying: ‘I told you so’?

Balls: Well I sat here on this sofa, one and two years ago and said if the government tries to cut spending and raise taxes too quickly, faster then other countries it will backfire. And the thing which makes me angry is that George Osborne and David Cameron were so personally just dismissive, they just said it was rubbish and now we are back in recession. Their plan has categorically failed, families and businesses are now really paying the price. That self-defeating austerity has put us through such pain and we need an alternative plan. We’ve got to get jobs and growth moving, they should’ve done this much earlier.

Showing anger at the coalition's arrogance, incompetence and failure to listen or respond is the right response to such questions. Now is the time for the Labour leadership to sit on the fence or split the difference or triangulate; now is the moment to channel the public's anger and discontent. It seems to be working for President Obama.

Remember: we are not all in this together. And the argument over the cuts isn't just about politics or economics; it's about real people's lives and livelihoods. Britons are suffering. According to new figures from the Trussell Trust charity, for example, the number of people visiting foodbanks for emergency food in the UK has doubled in the last year, to over 128,000 people.

So let's be clear: Ed Miliband is doing a fine job on phone-hacking, the Murdochs and Huntgate but these aren't the issues that will win him the next general election. The economy was, is and will continue to be the defining issue of this parliament - and, as yesterday's GDP figures conclusively demonstrate, the coalition government has made a mess of it. If the Labour leader is able to stand before voters in May 2015 and pull a Reagan, Cameron and Clegg will be in big trouble. And Osborne's much-hyped reputation as a master strategist will be buried for good.


Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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I’ll miss the youthful thrill of Claire’s Accessories – but the tween Mecca refused to grow up

From an adolescent rite of passage to struggling to stay open: how the tackiest shop on the high street lost its shine.

The first day I was allowed to go into “town” (hailing from rural Essex, that’s the local shopping centre, not London) with a friend – unsupervised by a parent – was a real cornerstone of my childhood.

We were 13, and looking back, we had neither mobile phones nor contingency plans, and my mum must have been sat at home for the entire two hours scared shitless, waiting for when she could pick me up again (by the Odeon carpark, 3pm sharp).

Finally free from the constraints of traipsing around department stores bound by the shackles of an adult, my friend and I had the most grown-up afternoon we could imagine; Starbucks Frappuccinos (size: tall – we weren’t made of money), taking pictures on a pink digital camera in the H&M changing rooms, and finally, making a beeline for tween Mecca: Claire’s Accessories.

As a beauty journalist, I’m pretty sure Saturdays spent running amok among the diamante earrings, bow hairbands and fluffy notebooks had an influence on my career path.

I spent hours poring over every rack of clip-on earrings, getting high on the fumes of strawberry lipbalm and the alcohol used to clean freshly pierced toddlers’ ears.

Their slogan, “Where getting ready is half the fun”, still rings true for me ten years on, as I stand on the edge of dancefloors, bored and waiting until my peers are suitably drunk to call it a night, yet revelling in just how great my painstakingly applied false lashes look.

The slogan on a Claire's receipt. Photo: Flickr

On Monday, Claire’s Accessories US filed for bankruptcy, after they were lumbered with insurmountable debts since being taken over by Apollo Global Management in 2007. Many of the US-based stores are closing. While the future of Claire’s in the UK looks uncertain, it may be the next high street retailer – suffering from the surge of online shopping – to follow in Toys R Us’ footsteps.

As much as I hate to say it, this is unsurprising, considering Claire’s commitment to remain the tackiest retailer on the high street.

With the huge rise of interest in beauty from younger age groups – credit where credit’s due, YouTube – Claire’s has remained steadfast in its core belief in taffeta, rhinestone and glitter.

In my local Superdrug (parallel to the Claire’s Accessories, a few doors down from the McDonald’s where we would sit, sans purchase, maxed out after our Lipsmacker and bath bomb-filled jaunt), there are signs plastered all over the new Makeup Revolution concealer stand: “ENQUIRE WITH STAFF FOR STOCK”. A group of young girls nervously designate one among them to do the enquiring.

Such is the popularity of the three-week-old concealer, made infamous by YouTube videos entitled things like “I CANNOT BELIEVE THIS CONCEALER!” and “FULL COVERAGE AND £4!!!”, no stock is on display for fear of shoplifters.

The concealer is cheap, available on the high street, comparable to high-end brands and favoured by popular YouTube “beauty gurus”, giving young girls a portal into “adult life”, with Happy Meal money.

It’s unlikely 13-year-olds even own eye bags large enough to warrant a full coverage concealer, but they’re savvy enough to know that they can now get good quality makeup and accessories, without going any higher than Claire’s price points.

They have naturally outgrown a retailer that refuses to grow with them; it’s simply not sustainable on Claire’s part to sell babyish items to a market who no longer want babyish things.

Adulthood is catching up with this new breed of teenagers faster than ever, and they’ve decided it’s time to put away childish things.

Tweenagers of 2018 won’t miss Claire’s Accessories if it goes. The boarded-up purple signage would leave craters in shopping centre walls soon to be filled with the burgundy sheen of a new Pret.

But I will. Maybe not constantly – it’s not as if Primark has stopped selling jersey dresses, or Topshop their Joni jeans – it’ll be more of a slow burn. I’ll mourn the loss of Claire’s the next time a pang of nostalgia for blue-frosted shadow hits me, or when it’s Halloween eve and I realise I’m bereft of a pair of cat ears. But when the time comes, there’s always Amazon Prime.

Amelia Perrin is a freelance beauty and lifestyle journalist.