This week the news has begun to sink in about the reality of public sector cuts and debt for the UK and Wales. The Local Government conference in Swansea was dominated by news of impending cuts, messages we have seen reinforced elsewhere, and across the political spectrum. As Dylan reports, the OECD has revised downwards its forecast for 2009 – predicting our economy will shrink by a further 4.3% with no growth from there in 2010. *gulp* That’s a drop that is worse that the global economy as a whole. The suggestion from Labour that we were well placed to weather this storm seems an increasingly hollow one.
Labour have also unleashed a ticking time bomb of debt, both domestic and in the state. If the Government are able to reduce UK debt by 1% of GDP for the next 7 years, we will still have one of the largest debt:GDP ratio in the developed world. Repaying the borrowing will be a long, painful and essential process.
So what does this mean in terms of real life for people in the UK. We know this economic maelstrom is leading to some tragic but predictable side effects. Shelter Cymru’s advisors dealt with twice the amount of debt they did last year, repossessions are up, unemployment is up – especially amongst young people, more businesses are going under…
But the debate so far has generally missed out on the effect this is going to have on future generations. People touch on the long term nature of the dramatic borrowing we have seen, but not its long term consequences. The UK has an ageing population; one that is, rightly, used to receiving a pension, free healthcare, [some] social services….. But funding our welfare state and our desire to make a society that is more just isn’t cheap. As our society ages, and the number of people in work falls how will we continue to pay for it all? A challenge now multiplied by the increased borrowing the Government has taken on.
So what sort of pension or health service can younger people look forward to? Will they be able to enjoy retirement at 60 or 65 as their parents did? Will they be older? Will they ever stop working? This debate about generational inequity, where one generation pays for another to receive a service it may well not get, has raged in the US and Germany for decades. It’s about time they did here too – it’s the only way we will find an answer. Vince has started work on it, suggesting changes to public sector pensions yesterday. We’ll need more of this, otherwise those baby bonds really won’t go very far.
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