Would the Conservatives have borrowed our way out of recession? At the time

Comment on Why I’ll Never Vote Conservative at a General Election by David.

Would the Conservatives have borrowed our way out of recession?

At the time the Labour party was talking about the economic stimulus package: massive government borrowing basically to keep the economy from free falling.

Despite every major economy deciding to take the same approach as Labour, the Conservatives opposed the concept of borrowing to grow our way out of a recession, they wanted to cut spending immediately, have the British economy and people take the economic pain and then rebuild from what was left.

During the last recession that was caused by the Conservatives poor management of the economy, the Tories response was to cut our way out of recession (what they wanted to do when the credit crunch hit). This meant massive unemployment, ridiculously high interest rates (it peaked at 15% under the Tories!!!!) and under investment in all public services.

Some areas of the country never recovered from the Tory recession of the 90s.

The above tactic worked, but the cost was a lost generation of youth to long term unemployment and significant damage to the public sector (NHS, education, everything was under invested!) that’s taken the Labour party over two terms in government to put right and then build on.

The Conservatives again wanted to cut our way out of recession, which would have worked, but like in the 90s the cost would have been under investment in public services, mass unemployment and we’d still have to go into some debt (would almost certainly have been less than we have now).

I don’t know if Labours current economic plan of borrowing to grow our way out of recession will be best long term (it’s a BIG debt), indications are it’s working. The borrowing protects public sector workers from the unemployment lines, that knocks on to the private sector keeping more money in the economy and more people in work, but it can’t go on indefinitely, at a point government borrowing has to stop and the debt has to be reduced, this will cost some jobs and investment in the public sector has to be lost.

My understanding is when the recovering economy is strong enough (when we have reasonable growth: expected in 2011) to cope with more unemployment and less investment in the public sector. The Labour government would reduce borrowing and reduce the support to the economy and we’ll then feel some of the economic pain we’ve avoided because of government borrowing.

The theory is because the borrowing results in economic growth that we wouldn’t get under the Tories plan, the overall damage to the economy and British people is less because it’s spread over time and we can cope with it better.

If Labour’s plan works (and I hope it does), the damage to British people and the economy will be spread over a decade plus rather than over night with the Tories plans! Imagine what would have happened to property prices under the Conservatives! Under Labour’s plan property prices have dropped, but not that much considering we had a recession.

The difference between the Conservatives and Labour plan is do we take the economic pain ASAP and build our way back or try to protect what we have and spread the economic damage over a long period of time.

I prefer Labours plan to protect what we have and spread the pain, so I’m glad the Labour party was in power when the credit crunch hit.

For the future do we want a Conservative shadow government that still wants to cut quite harshly to reduce the deficit ASAP that will result in under investment in the public sector and more unemployment and a strong chance of pushing us back into negative growth (double dip recession). Or a Labour government that still wants to spread the damage over time, Labour plan to start the cuts in 2011 when we have a stronger economy (more growth), it’s going to hurt, but not as much as the Conservatives plan.

David