It’s why a summer of discontent is looming for whichever party is victorious in May.  It’s why we run the real risk of dipping back into recession: our media and our politicians are obsessed with the deficit and have convinced themselves (and many others I must add) that cuts are inevitable, desirable and necessary.  This election is running the risk of becoming an election all about when Thatcherite cuts are brought in, and not about if they should be at all.  This is an error.

Of course any alternative strategy is not easy.  But it is essential.  The Left Economics Advisory Panel has published a very useful pamphlet titled ‘Breaking the Cuts Consensus’ that explores this question in admirable detail.

On the first main issue, Labour is taking the correct position out of the main parties: any cuts agenda must not be deflationary.  The Conservative position on this is the most nonsensical and actually could well be the issue that they lose the election on.

But it isn’t as if deflationary effects of cuts will vanish as soon as the economy starts to revive.  Not at all.  That danger continues to exist years after the election.  So ’savage’ cuts from Lib Dems, or ‘deep’ cuts from Labour or Tories will have a basic impact on the economy: not just on the areas they cut from but on other areas too.  The people who lose their jobs in the cuts might not be able to find new jobs because of the multiplier effects of those cuts and that becomes a vicious circle.  It isn’t sensible economics.

Furthermore, it isn’t as if our public services are brimming with wealth at the moment.  Anybody who works in the public sector will tell you that their area is short of money: I work in FE colleges – no money; others will say the same about other areas I’m sure.  People talk glibly of cuts but can our public services really survive cuts?  I’m not sure they can.  Can our industrial relations survive cuts?  People talk about the Winter of Discontent of 78/79; this was not caused because unions were too powerful and influential (this is the common Tory line, but it makes no sense – powerful unions don’t need to strike) it was caused because of the IMF-induced cuts agenda of the Callaghan government.  If people are concerned about their travel plans today, they will need to be much more concerned about all manner of services over the next 6-12 months, if the sorts of agendas set out by all the parties are carried out.  Again this isn’t a sensible, manageable or sustainable approach.

So why do all the parties seem to agree on a path that will likely:

a) Keep us in recession / send us back into recession

b) Hugely damage and possibly kill some of our most valued public services

c) Increase unemployment (and therefore require more public expenditure / borrowing, etc, etc)

d) Lead to disastrous industrial relations and paralysis?

The answer for the Tories is easy: this is what they believe in.  It is class politics of the crassest kind: we should all pay for the massive crisis their people (by that I mean the super-rich) created and we should protect their people from the effects of it, while we feel the effects straight in the face.

But why Labour?  It is the inordinate fear of the deficit and, perhaps more to the point, the media portrayal of the deficit.  In fact, if you look at the IMF’s accounts of government borrowing today and projected to 2014, there are many other countries with far more eye-watering figures (we are borrowing more than three times less than Japan’s figure as a percentage of GDP, for example).  The budget deficit, at 12.6% is high, but not unprecedented nor unmatched around the globe.

Now nobody would argue that this is a good way to manage your economy under normal circumstances: that you should spend years trying to have the deficit as low as possible then for it to rocket at a time of crisis.  Some countries that have had a different overall approach to their economies over a protracted period have faired rather differently through all this (for example Sweden). 

As such this is a two phase project, but the first phase is to avoid panic.  Panic measures will create their own crises – underfunded services, new economic difficulties, etc.  But we also have to restructure the way we do economics as a country.  The problem with the agendas of all the main parties is that they seem to be trying (in their own, rather unthinking ways) to get things back to normal.  And normal is what got us here.

So: no panics, followed by new, radical thinking.

But I fear what we’ll have is radical cuts born of panic, followed by tired, old schemes that bring us right back here in a few years time.  And that is a tragedy.

Will anybody dare to break from the cuts mantra and from the tired, old, failed Thatcherite policies that governments of both hues have followed for thirty years and which have led to this?