The Government's intention of spending our way out of a recession with money it hasn't got is a seriously flawed policy which could well result in national bankruptcy. This must be reversed.
Our Solutions
1. All unnecessary public expenditure must be cut back. This will cause a contraction in public sector employment which in any event, needs to happen as soon as possible. 2. The net savings from 1 above, i.e., salaries less increasing welfare payments, would be used to reduce taxation both to individuals and businesses, thereby increasing the demand for goods, stimulating manufacturing, increasing employment and in the medium term, increasing the Treasury's tax receipts.
Further, such tax relief to industry (especially to small businesses) would result in a transfer of employment from the public sector to the private sector.
Whatever the causes of unemployment, e.g., the massive economic downturn or the deliberate contraction in government spending (1 above), it must be appreciated that to resolve this crisis, the nation will need to pass through and endure the pain of austerity at least in the short to medium term.
3. The Popular Alliance would impose strict controls over the Banks' lending policies, thereby preventing any future gambling on toxic and exotic securities (the cause of much of the present global crisis) and making house repossessions only the very last resort.
4. The Bank of England would be made responsible for ensuring that the Banks were tightly supervised (3 above) in particular the Banks would be forced to pass on in full any reductions in base rates.
5. The housing market is at a total standstill, it being estimated that for every buyer there are 15 properties for sale, and a recent survey estimated that when a property is sold, 6 months (on average) elapses between offer and completion.
The above, coupled with rising interest rates charged by lenders (to be stopped as in 4 above), rising levels of mortgage arrears, repossessions and negative equity, make for housing to be made a special case, both on social and economic grounds, and leniency towards home-owners would be enforced by the regulatory authorities (3 above).
Until order is restored to the world markets and it is known what adjustments (if any) change the way markets operate in the future, it is suggested that it would be pointless and futile to formulate a Finance Policy at the present time. Such a policy could well be out of date within a short space of time and therefore it is proposed to review the economic situation and present updates at regular intervals.
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