Figures released today by the ONS show that for the first 6 months of this financial year, the government’s budget deficit has increased by 10% over the same period last year. But should we care? Labour certainly thinks so. Shadow Treasury spokesman Chris Leslie said:
“These figures are a serious blow to George Osborne. Not only is he set to break his promise to balance the books by next year, but borrowing in the first half of this year is now 10% higher than the same period last year. As the [Office for Budget Responsibility] said last week, stagnating wages and too many people in low-paid jobs are leading to more borrowing.”
Chris Leslie is probably right in the sense that the figures are a blow to George Osborne – at least in the minds of those in the media bubble who think the deficit is the all encompassing issue for the General Election. For most people though, other factors like jobs, housing and wages are likely to be more important factors for floating voters.
In a way we should be glad the deficit remains high. For all the talk, and while certain sections of society have been clobbered by austerity measures, overall, government spending continues to make a positive contribution to growth. George Osborne has failed utterly to meet the targets for deficit reduction he set himself, but we should be thankful for that. If he had succeeded, we’d probably be failing down a pretty deep hole right now.
There is another sense that Leslie is correct though. While the size of the deficit doesn’t really matter (at least at the moment anyway), the fact the tax receipts are weak could be an indication of poor wage and productivity growth, which is definitely something Labour should be banging on about (but preferably only when they have a proper policy of their own to address the problem).