The recent riots in Britain put the country’s fiscal picture in the spotlight once again.
Many international commentators said the riots were spurred by the austerity measures that Prime Minister David Cameron’s coalition put in place. The Lib Dems were the side order to a larger helping of right-wing bravado. It was “Cameron-to-the-rescue” when the politics boiled down to the UK’s real weakness throughout 2008 to 2010 – the economy.
And so the cuts came – right after an onslaught of media hype that shook many in the country worried about employment, housing and spending.
The press carried messages from Mr. Cameron warning that “every household will be affected” by the “most drastic cuts public spending cuts in a generation,” adding that Britain’s “whole way of life” would be disrupted for years.
It was June 2010, the annual deficit had reached £156 billion ($252 billion), interest payments were £42 billion a year and Cameron warned, and warned again, that the interest on the debt would rise to £70 billion if no immediate action was taken.
All the while, Cameron threw a course of steady daggers at the Labour party’s past Brown and Blair episodes and their monetary mistakes, much like any successor to an assumingly failed government would do.
But many deemed the cuts were out of place in a government that was “part-laissez-faire, part-stern but fair,” as the coalition would probably like to describe itself (I can almost imagine it in sing-song to a David & Nick Clegg parody). The cuts were also out of place in a conventionally “relaxed” country. Britain is a liberal model of the modern welfare state, one that separates those deserving benefits from those who don’t, all the while attempting to encourage job production.
But the coalition’s cuts were also ideologically driven; the Conservative-majority government introduced the cuts not only to “save the day,” but in the process it also wanted to reduce the country’s reliance on benefits.
“There’s a benefit for everything,” was a popular phrase I remember reading in the right-wing papers throughout their years of tears and tantrums against the Labour government.
But they did list the facts:
“The Spectator magazine shows that there are over 90,000 unemployed single parents in Britain claiming benefits for four or more children. Among those in receipt of jobseekers,’ incapacity or lone parent allowances are 6,870 with six children, 2,260 with seven and 910 with eight or more. That’s a pretty sizeable minority,” the Daily Mail reported in October 2010.
The new government began to roll out the spending cuts, which involved slashing some of the £80 billion that is meant to spur job creation, maintain living standards and support social programs. The government tripled the cost of university tuition and abolished the Education Maintenance Allowance, which is paid to some 640,000 people aged 16 through 18 to help them continue in higher education.
And so when the youth (a majority of the rioters were young people) came out in their droves last month throughout Britain to raid, smash and wreak havoc on the country’s streets, many put two and two together: A simple equation that blamed the austere cuts for the mess.
But fiscally, the austerity measures have saved Britain. Looking at the nation’s broader economic picture, bailout concerns over other countries in Europe such as Greece, Spain and Italy have outstripped fiscal worries in Britain. The cuts have slowed Britain’s accumulation of debt, not a small feat.
Britain is now a safe haven against a backdrop of global economic woe in Europe, the United States and the Middle East.
But back to the riots, and you have a few “safe-bet” options: blame it on the austerity cuts, or blame it on the country’s deep-rooted social problems, or blame both (in a cause-and-effect consideration).
Either way, Britain’s economy has to do well to tackle a slice of its social problems, no matter how much they may be rooted in concerns over societal discipline. Economics has a pivotal role to play and can be blamed for tipping a nation over the edge.
Now, as Britain’s “safe haven” image becomes slightly stale and in need of positive growth figures to re-energize investor sentiment, its gross domestic product forecasts have done exactly the opposite.
While the cuts have appeared to slow the rate of the country’s debt, the British Chambers of Commerce (BCC) lowered its expectations for the economy’s growth in 2011 and 2012. This year, the BCC cut GDP growth to to 1.1 percent from the 1.3 percent in its June quarterly forecasts, while for 2012 its forecast slipped to 2.1 percent from 2.2 percent.
Attempts at fixing this will either result in further cuts or more borrowing. The BCC has said the government would need to borrow £5 billion more than planned at the time of the March budget.
Britain’s economy is now in the spotlight for all the wrong reasons, and we are yet to witness the long-term effects of the austerity measures begun last year.
Worryingly, social disorder may have just been a taste of what is to come.
(Eman El-Shenawi, a writer at Al Arabiya English, can be reached at: email@example.com.)