STUC report claims austerity will make UK poorer

Backlash: The STUC says tax cuts for the rich prove Britons are not 'all in this together'.
Backlash: The STUC says tax cuts for the rich prove Britons are not 'all in this together'.

Scottish trade unions claim the UK will become less fair, less stable and poorer unless the Westminster Government abandons its austerity plan.

The Scottish Trades Union Congress (STUC) has published a report on the coalition government's performance since it took office two years ago.

It finds growth forecasts have been continually revised down and the private sector has been unable to counterbalance the large-scale job losses in the public sector.

It also claimed that measures such as the cut in the 50p top tax rate gave the lie to the Conservatives' slogan "we're all in this together".

The report, titled "Yes, the time has come to say 'we told you so'", reflects on the progress made in a range of economic and social policies.

It argues forcefully for a return to Keynesian economics, claiming that public investment is needed to stimulate the economy at times of low growth.

The report says: "Growth forecasts have been consistently revised down. Private sector jobs growth has been weaker, public sector job losses higher and business investment much lower than anticipated.

"Ministers might seek to blame this appalling story on external factors but the facts suggest that they must look much closer to home to identify the problem."

The report also finds that jobs growth in the private sector had been "nowhere near sufficient" to compensate for job losses in the public sector.

A spokesman for the STUC said: "We believed the decision to force rapid austerity on a weak economy was unnecessary and irresponsible.

"We argued that the lessons of economic history are unequivocal: when unemployment is high, the output gap large and interest rates already close to zero, public investment is required to grow the economy and get people back to work.

"Austerity would undermine recovery in the private sector directly through the loss of Government contracts and indirectly as jobs were lost and wages squeezed.

"Unemployment would remain higher for longer than necessary and the human, social and economic costs would weigh on society for decades. Society's most vulnerable would be hit hardest as benefits and services were lost or cut."

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