Truth about huge deficit is unpalatable to government

Mervyn King
Mervyn King
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Why is it that every time a member of the coalition speaks, they chant the catechism that ‘Labour ruined the economy’?

Hail Mary, full of grace, Labour caused the Big Disgrace! Either Blair and Brown were masters of the universe and zapped the economies of Iceland, Greece, Ireland and three-quarters of the rest of the world, or it’s a ritualistic myth to justify the cuts (sorry, ‘savings’).

Recently, none other than Governor of the Bank of England Mervyn King nailed this endlessly repeated lie that the deficit is the result of Labour’s profligacy, rather than the breakdown of an unregulated, unreformed financial system endorsed by the entire political class, including the Labour leadership.

The truth is unpalatable to the government and its big business backers. Greedy, self-seeking financial institutions wrecked the economy by placing their roulette chips on the red instead of the black.

They are the ones that continue to pay obscene bonuses (we are talking in hundreds of millions, while real wages are being forced down across the workforce); the ones that fund the Conservative Party (over half the party’s funds come from the City); the ones that continue to avoid tax to such staggering levels that if just one of them paid the proper amount, it would cover 60 per cent of the alleged level of benefit fraud.

Yet the government refuses to bring to heel the banks that caused the economic meltdown.

Instead of directing the banks they own or underwrite (like RBS and Lloyds) to ditch bonuses and drive recovery, George Osborne and his LibDem lieutenants have cut Labour’s bank levy, slashed corporation tax and signed a toothless pact that will achieve neither.

The banking system should be the servant of industry, not its master. It isn’t as if it works.

The current policy, besides being ludicrously unfair, is leading us like lemmings towards the brink. Mr King warns of another financial crisis brewing caused by the banks. He has even expressed surprise that the ‘degree of public anger has not been greater.’ Just hold on. You ain’t seen nothing yet!