Seven Months In - November 2010

The Coalition Government came together with one overriding purpose: to give the country a stable five year parliament in which to tackle the disastrous state of the Country’s finances.  Labour left Britain facing a staggering £150billion annual deficit between what the government was spending and what it was able to raise in tax revenue.  Everyone knew that there had to be cuts, even Labour had pencilled in £40 billion of cuts – though they refused to say how they would be made.  The key difference between the parties during the election campaign was about when the cutting should start.  Labour wanted it put off for another year whereas Conservatives argued that  - like your credit card bill – the longer you leave it the worse it gets.  This was the policy adopted by the coalition with immediate cuts this year and a programme of cuts over the next four years.  The benefit of this policy has already become apparent.  First, employment has grown strongly over the last two quarters, also and much more importantly, we have continued to enjoy low interest rates despite the very high level of borrowing.

As the sovereign debt crisis has raged around us with financial markets losing confidence first in Greece and then Ireland, then Portugal and even Spain, the UK has not been the subject of any doubt notwithstanding that we have the biggest budget deficit of them all. The early decisive action of the coalition took Britain out of the danger zone.  Our triple A credit rating has remained secure giving us the breathing space to sort ourselves out.  There are plenty of rocks ahead but the coalition has made a flying start.