UK in recession: Austerity and privatisation is not the solution

This week, Jeremy Hunt, the Chancellor of the Exchequer, announced that he is running his third marathon, and he’s doing it for a good cause. He’s raising money for the Royal Surrey Cancer Centre and has already secured more than £400K in donations. A huge achievement. Or it would be, if it wasn’t for the fact that it is - quite literally - his job to secure proper, sustainable funding for NHS cancer centres in the UK so these vital institutions don’t have to rely on charitable fundraisers to function. The NHS is not a charity, and for the man who is in charge of the country’s purse strings to be treating it as such is more than a little worrying. 

Hunt’s cognitive disconnect on this proves that privatisation is always the first and last instinct for Conservatives, even when there is nothing left to sell - Hunt’s personal fundraising endeavours for the NHS have fallen in the same week as figures revealed the UK has officially tipped over into recession. GDP shrank by 0.3% in the last quarter of 2023, following a decline in all main sectors of the economy and collapse in retail sales in the run-up to Christmas, as households cut back on spending amid the cost of living crisis. The ONS said growth over the course of 2023 as a whole was estimated at 0.1%, the weakest year since 2009 during the financial crisis, excluding the economic collapse during the pandemic. So far, rather than kickstarting economic growth as promised, Sunak & Co appear to be merely giving our economy a kicking. 

And Hunt’s response to the recession news was as tone-deaf and as jarring as asking us to give money to a public service he wouldn’t fund properly. “The underlying picture here is an economy that is more resilient than most people predicted, inflation is coming down, real wages have been going up now for six months,” he declared. “If we stick to our guns, independent forecasters say that by the early summer we could start to see interest rates falling and that will be a very important relief for families with mortgages.”

Sticking to guns, in this case, means falling back on Hunt’s solution to all life’s problems: more cuts, more austerity. The chancellor is reportedly considering making billions of pounds of spending cuts to fund pre-election tax cuts in the next budget. According to the Financial Times, Treasury officials have been looking at reducing the projected rise in public spending from 2025 onwards to about 0.75% a year, to pay for a planned £5bn for tax cuts in this spring’s budget.

This is widely perceived to be a bit of largesse to voters and to business ahead for the approaching general election. It might well backfire. Poll after poll this year suggests voters are prioritising public investment over tax cuts, and businesses increasingly agree the UK needs to spend more, not less, to bounce from the pandemic and the long aftermath of the 2008 crisis. This is not the time to be fiscally conservative with policy - or fiscally conservative as a campaigner. 

Keir Starmer and Rachel Reeves would do well to consider this. So far, Labour have called Hunt’s reaction to the recession news both “insulting” and “out of touch”, adding: “The Conservatives’ failure to take any responsibility for Rishi’s recession show why we need an election.” But we as voters are yet to get any assurance whether a Labour government will be putting our money where its mouth is - whether it will finally shake off its pathological terror of being labelled the tax-and-spend party, and do what needs to be done.