‘Misery for millions’: CBI backs more austerity, despite slashing GDP forecast
The Confederation of British Industry (CBI) said Monday that cutting the deficit was the “most important job” facing the government.
The lobby group, which represents some of the UK’s largest businesses, also expressed concern over the EU’s failure to reach a deal with Greece.
Economist Michael Burke, meanwhile, attacked the CBI’s support for further austerity, saying that big business benefits from the harsh cutback in public spending, causing “misery for millions.”
James Meadway, a senior economist at the New Economics Foundation (NEF) was equally critical, describing the CBI's support for government cuts as "peculiar."
Announcing the CBI’s latest economic forecast for the UK, director-general John Cridland emphasized the importance of austerity to business.
“The overriding duty of a government, to make sure the public finances are in order, has been in poll position on the racing grid for CBI members for the last five years, and is today. They consider that is the most important job for the government to do and it’s a job that is only half done,” he said.
“So we don’t want the government to ease off on austerity. We want the government to continue to tackle the deficit in the public finances but to do so in an intelligent way.”
CBI mad. Osborne's last round of austerity collapsed growth. Cridland wishful thinking if thinks it'll have no effect this time #r4today— Panopticon (@Panopticon6) June 8, 2015
Cridland said Britain was about to see “solid, steady and sustainable growth” over the next two years.
He added that CBI members were feeling more hopeful about the UK’s economic recovery.
The CBI chief’s optimistic picture came despite the fact the group downgraded Britain’s economic growth forecasts.
The group predicted Monday that the UK would grow by 2.4 percent this year and 2.5 percent next year, down from its February forecast, which was for 2.7 percent and 2.6 percent, respectively.
Burke, a former senior international economist at Citibank, criticized the CBI for backing further government spending cuts.
Speaking to RT, he said: “The CBI of course remains a strong supporter of austerity. This isn't surprising as the purpose of austerity is to transfer incomes from workers and the poor to big business. CBI members benefit from that.
“But this does nothing to alleviate the economic crisis, while causing misery for millions.
“The cause of the crisis remains the weakness of investment, which CBI members play a key part in causing. They are perpetuating the crisis and demand that workers pay for it,” he said.
Their comments follow a warning from the Organization for Economic Cooperation and Development (OECD) that Britain should rein in the pace of its deep spending cuts to public services.
The International Monetary Fund (IMF) meanwhile called on Chancellor George Osborne to abandon spending cuts altogether.
In a staff discussion note published last week, economists at the IMF said countries whose debts fall into a “green zone” – where they enjoy low interest rates and a low debt ratio – should simply live with it.
“The mantra that it is always desirable to reduce public debt must not go unquestioned. A comparison of costs and benefits must underpin policy advice,” the note read.
“For countries in the green zone, the case for living with the debt is a strong one.”
James Meadway, a senior economist at the New Economics Foundation (NEF), described the CBI’s commitment to austerity as “peculiar.”
Speaking to RT, he said: “The CBI’s forecast reduction reflects some unexpectedly poor showings for the UK economy this year, particularly the slowdown in the official growth figures [Office for National Statistics] reports. But it makes their commitment to austerity all the more peculiar.
“Barely a week after the IMF showed austerity isn’t needed for the UK, and just a few days since the OECD warned the government over its cuts, further austerity is the last thing this economy needs.
“Britain’s biggest employers’ organization should be making the case for increased investment and higher wages, not damaging government spending cuts,” he added.