PLAN B OR ABANDONING AUSTERITY?

The latest GDP figures don’t make pleasant reading, showing that GDP fell by 0.3% in the last quarter of 2012, this should give further confirmation to most people (including economists) that the Con Dem Coalition Government’s questionable austerity experiment (Plan A) is clearly failing. This has prompted a flurry of calls for a change of approach (Plan B) from all quarters, including the chief economist of the International Monetary Fund (IMF). It’s time for the Chancellor to change course and announce radical growth measures in the Budget which takes place on 20th March.

Austerity is not just not working, it’s actually smothering any prospects of sustained recovery and economic growth. It’s time for some balanced well thought out investment in infrastructure and green energy which will help to create  jobs and provide the key to getting the economy back on track. Plaid Cymru has long advocated a progressive alternative to drastic public sector cuts (and their consequences) in order to stop the UK sliding back into recession and to avoid a whole decade of economic decline.

Plaid Cymru's Treasury spokesperson, Jonathan Edwards MP, said:

"These latest GDP figures signal the latest disaster for a Chancellor whose ideologically-motivated policies make him deaf to all warnings and cautions.

"Tackling the Government deficit and debt should only be done when the economy is growing and confidence is high. Current austerity is strangling any sustained recovery. 

"It looks increasingly likely that the cherished AAA credit rating is in jeopardy making the pain of the Government debt pointless. There is now a real threat of a triple-dip recession and the Chancellor has no choice but to change course.

"We must invest in infrastructure and focus on creating meaningful jobs if we are to get the economy back on track - this is what Plaid Cymru outline in our plans for a Bank of Wales to support SMEs and what we achieved in our recent Budget deal with the Welsh Government.

"Wales is suffering disproportionately as a result of the Coalition's austerity experiment. The Bevan Foundation recently announced that welfare cuts would wipe £100m from the Welsh economy. Real terms cut to benefits will suck demand out of local economies as ordinary families are forced to tighten the purse-strings even more.

"As the Chancellor announces his Budget in March, we in Plaid Cymru will present our alternative economic vision that would generate growth, tackle unemployment, and equip Wales with the powers necessary to have meaningful control over its own economy."

THE PEOPLE SPEAK

The Lithuanians, given a chance to express their approval or disapproval of the austerity programme, appear to have voted out their Conservative Government. With some results still to come in yesterday, the two leftist parties, Labour and the Social Democrats, appear to have finished first and second, and their leaders have met to discuss terms of a coalition. Lithuanian PM Andrius Kubilius' government has been punished for cutting pensions and public wages.

Voters passing judgement on austerity in Lithuania (Associated Press)

In a seperate referendum, the Lithuanians have voted against plans for a new nuclear power station, which the government had previously said the plant would cut dependence on imported Russian energy. Environmentalists and other political parties had questioned its affordability. The result from Sunday's referendum is non-binding, but surely leaves a vast question mark hanging over the future of the proposed plant.

The former government enforced a harsh austerity programme, to stave off national bankruptcy. Lithuania’s economic output dropped by 15%, unemployment soared and thousands of young people emigrated in search of work. Of late the Lithuanian budget deficit has largely been dealt with and GDP reached growth of 5.8%.

Lithuania's harsh approach won praise from other governments and the International Monetary Fund. Yet the price paid by ordinary Lithuanians’ came far too late to be translated into a political revival for the conservative government, who have paid the price at the polls. The opposition had promised to raise the minimum wage, make the rich pay more tax and put back euro entry until 2015.

In the Lithuanian general election, with election counting complete in three-quarters of voting districts, the Labour party are on 21%, the Social Democrats on 19%. The former Prime Minister Kubilius' Homeland Union Party is on 13%. The bottom line may well be that if you give the people a change to express their option on austerity and you may get a decisive answer...this scenario may increasingly play on David Cameron's mind over the next few years.