We have been told time and again that Corbyn’s economic policies are in the land of fantasy. That he’d bankrupt us before bedtime and send us back to the 1980s in Venezuala. Portugal’s Socialist government have shown that to be a malicious lie spread by those who serve the Conservative party.
Portugal went a similar way to Britain after the financial crash and following European debt crisis. It elected a Conservative government to cut it’s debt in 2011. However it did need a bail out from the IMF which it received on the promise of Austerity reforms, the bailout was €78bn.
Just like in our nation services were privatised, VAT raised and public sector jobs took a pay freeze if they were lucky. Education got a 23% cut, health and social security went the same way.
The result was 17.5% Unemployment in 2013, a 41% jump in company bankruptcies and year after year of net economic decline. The best annual GDP growth of the nation was 0.9% in 2014. Every other year saw the economy shrink.
However in 2015 a Socialist coalition got into power. Their radical reforms included raising the minimum wage, lifting a freeze on pensions and cancelling pay cuts for civil servants. Sound familiar? The clincher, to really show they are the Portuguse Corbyn’s Labour, they introduced 4 new bank holidays.
The opponents of this government pronounced it fairy-tale economics. Sure to bankrupt the economy.
That didn’t happen.
What did was a full economic recovery. The economic growth jumped, 13 quarters of consecutive growth followed. Unemployment reduced by 7.7% since it’s peak.
Now Socialist government’s have a reputation of creating short-term growth at a long-term cost.
When I informed one of my centrist writers of their recovery he said this:
“The problem with Socialist governments is they can generate short-term growth but pile on the debt long term”
Portugal has halved its deficit in two years. Our austerity measures have taken off 3/4 in 7 years, but we will not achieve a balanced budget until 2025 if Theresa May is to be believed.
We do not need austerity to reduce our debt. And we cannot continue with Austerity if we wish to keep our public services.
Investment led growth is the way to go.