According to the Bank of England, the Tories have managed to create the worst peace time economy in more than 100 years!!! Across, Europe, austerity is being rejected. In France, Hollande looks set to replace Sarkozy. The Dutch Government has fallen, because the policies of austerity were rejected - this time by the extreme right element within the Government. The Czech Government faces a similar problem. The Portuguese Social Democrats have called for their cothinkers across Europe to begin a campaign for a reversal of austerity, and adoption of fiscal stimulus. As George Magnus pointed out on Newsnight, last night, markets are beginning to worry about the consequences of austerity, not just in driving Europe as a whole into an uneccessary recession, but of the political and social consequences that such policies threaten to unleash. In Greece, the Parties of the Left and Far Left, now have a higher poll rating than the combined rating of the Greek Social Democrats and Conservatives. The French election showed support of 30% for the Stalinists, and the Front National. The elections in Germany are likely to also see a move to the Left.
Meanwhile, the UK Tories are finding themselves under daily pressure from the capitalist media, which is traditionally there friend. The Government is particularly prone to fracture, because not only is it a Coalition, with some of the Liberals pulling to the left for populist reasons, but because it is being pulled apart in the other direction, by the potential of a split to UKIP. The government, really has been incompetent from Day One, and todays Double Dip, is not just due to the austerity measures introduced, but due to the fact that just before and after the eelction, the Government hyped up the significance of the deficit, and made the ridiculous claims about Britain being like Greece! That undermined confidence of consumers and businesses, which started the rot in the middle of 2010. In recent months they have tried to do the opposite, but now in conditions, where the economy really is in trouble as a result of the consequences of that lack of confidence, and because of their austerity measures, which have taken billions of pounds worth of aggregate demand out of the system.
This morning a number of pundits from the Financial and Business community were brought forward to challenge the data, which showed that the economy sharank by 0.2% in the last quarter. They have pointed to upbeat business surveys. But, the likely cause of that discrepancy is not that the GDP data is wrong, but that business groups, taking fright at the deteriorating situation, have themselves tried to talk the economy up, by presenting unrealistic pictures of how well they were doing, in oher words juicing the data. With the Liberal-Tories under pressure on a number of fronts, including now being under attack from Murdoch and his Evil Empire, with Bank of England members now admitting what I had set out previously, that inflation is not going to fall much below 3%, this year (which means even official interest rates might have to rise soon), with the huge bubble in the housing market still to pop, and its consequences for the Banks, and with the Liberals and Tories likely to get slammed in the local elections, they will be increasingly forced to fall into line, and abandon austerity, for co-ordinated fiscal stimulus across Europe, or they are likely to find themselves out of Government long before the next election is due.