The IMF is seeing things – dead economies. On the one hand I was reassured that it is joining me in raising concern that a double-dip recession is becoming more not less likely but on the other, I wish that they had seen signs that I was wrong. Look, I’m not a qualified economist (although 30 years in one of the country’s key economic ministries may have given me a little more insight than the average man on the street) but does it really take a degree in economics to understand the key issues affecting the global economic landscape over the last year? I don’t think so.
It is clear that debt reduction and cost-cutting must continue but it really does look like the current levels of both are stifling what little economic growth we might have expected. The simple fact is that if businesses cannot sell and people are not buying, growth will remain elusive. However, Flatline George is not for turning and there will be no ‘plan B’. Well maybe not but ‘plan A’ seems to have a new annex – bringing forward hundreds of millions of pounds of infrastructure spending.
New roads to half-full trading estates or bankrupt and empty construction sites do not fulfil their potential. Building new higher-speed railways along the western side of the country whilst the eastern side retains miles of quaint pre-Beeching infrastructure is just foolhardy. The point here is that unless infrastructure projects bring real long term benefits to the communities they serve, they are simply short-term job creation schemes – mere sticking plasters on a gaping economic wound.
America is about to sneeze and the Euro Zone already has flu. The months and years ahead will be incredibly difficult, without doubt. But stubbornly refusing to revisit ‘plan A’ and careless use of infrastructure funds will only leave us more vulnerable and prolong the misery of economic stagnation or recession.