Osborne Deficit Push Risks Economy's Staying Power, IPPR Saysby
Think tank says chancellor should do more to invest in skills
Autumn Statement and Spending Review published Nov. 25
George Osborne’s continued austerity push isn’t boding well for the U.K. economy’s staying power, according to a report by the Institute for Public Policy Research.
As countries across Europe try to shake off the effects of the recession and prevent permanent damage to their labor markets, the institute says the chancellor of the exchequer needs to do his part and invest more in improving skills. According to its research, there are “deeply alarming” prospects that unemployment, underemployment and inactivity risk becoming permanent characteristics across the European Union.
The Conservatives have been struggling to entrench the U.K.’s economic recovery since their surprise election victory in May, and spending on investment would clash with their promise to reduce the budget deficit. Osborne announces his end-of-year fiscal statement on Wednesday, and the prospect of an easing in austerity has waned after figures last week showed the chancellor is on track to miss his budget target this year.
“Investment in the country’s skills should be a priority for the chancellor. Instead, skills funding looks likely to be cut drastically in the forthcoming Autumn Statement,” said Catherine Colebrook, chief economist at the IPPR. “More needs to be done to ensure that productivity carries on growing.”
Research by the IPPR for a JPMorgan Chase labor-market skills program shows that European governments should tackle youth unemployment, upgrade skills and boost productivity, and match training to skills needed to address prevailing issues since the financial crisis.
In the U.K., spending on skills and education is likely to fall by the wayside as commitments to protect health, defense and overseas aid mean other departments face real-terms cuts in spending of as much as a third over the next four years. It would be a “counterproductive move, given how important skills investment is for boosting labor-market participation and ultimately for tax revenues," Colebrook said in a phone interview.