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THE UK SPENDING CUTS 2013 - RESCUE TO RECOVERY - AN IMPECCABLE ANALYSIS


To: The Right Honourable British Chancellor of the Exchequer Mr. George Gideon Oliver Osborne   

From: Athinarayanan Sanjeevraja

Date: July 9, 2013

RE: UK Spending Round - Rescue to Recovery - An Impeccable Analysis

Suggestion:
Good Morning Mr. Chancellor. Let me start by paying my respects to you and through you to.

Mr. Chancellor, I see UK economic outlook improve gradually during the second half of 2013. Britain spending cuts face severe in 60 years. UK fiscal consolidation cannot accomplish through spending cuts alone. Education will suffer an 8.4% cut. Education cuts will make UK less competitive because our children won’t be able to compete in the world and neither will our nation. However, school spending is safe guarded. Your government allocate total £50 billion investment for infrastructure. In my opinion, your government had done too little so far for infrastructure. Lowering infrastructure spending undermines the sector’s ability to stimulate growth or job creation. Moreover, it is not all good news for the infrastructure because departmental cuts like road maintenance likely to suffer.      

Mr. Chancellor, your government has announced no increase in capital spending up to 2017-18. This will undermine the public sector investment and the share of national income broadly over the next four years. Your government 8% cut in the foreign office budget, culture, media and sport faces 7% cut all welcome. Your government announced 1% rise on public sector wage bill. I identified spending for the public sector wage bill for UK has increased faster than GDP and it contributes to the problem of government deficits.

Mr. Chancellor, minimum wage bill is best for economy because wage policy is accountable for current account imbalances in UK and allows wage bill really accountable for the huge national debts. Moreover, wage increases have undermined the competitiveness of UK. Your spending cuts alone cannot accomplish UK fiscal consolidation. Some years it can be expansionary, some years it can be contractionary. So we have no reason to prefer just spending cut. In my opinion, UK need for structural economic reforms in raising growth potential and fiscal consolidation. The budgetary implications of major structural reforms are to be taken account for UK fiscal consolidation. So we need a credible framework for sound fiscal policies which could favour both structural reforms and fiscal consolidation.        

Mr. Chancellor, I am confident that UK spending cuts have positive impact on net revenues and would have significant benefits for UK economy.       

Sincere Regards,
Athinarayanan Sanjeevraja.   
Athinarayanan Advisory Authority

Athinarayanan Twitter   

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