The biggest news item surrounding the Armed Forces this week is the shock announcement from the Chancellor that whereas the acquisition costs of the Trident replacement were previously expected to be funded directly from the Treasury, now the £20 billion cost should be absorbed by the £36 billion defence budget. At the same time speculation from the more stridently right-wing of Conservative support is reaching a fever-pitch over the possibility of a merger between the Tories and the Liberal end of the Lib-Dem’s.
George Osborne has announced that Britain will emulate Canada in its actions to eradicate the budget deficit, and attempt to recreate the miracle of transforming a nine percent deficit into a surplus with three years. This will be achieved, according to Mr Osborne, by a “once in a generation” revolution in public services, instigated by the question; “what needs to be done by government and what we can afford to do”. Be in no doubt, if the Canadian experience is anything to go by, department budget cuts in the region of 20% will lead to nurses and teachers getting the sack in addition to the ‘faceless’ quangocrats that the public love to hate, but the result will be worth it.
At a time when Britain was facing a future trajectory that ends with a national debt of 400% of GDP with 27% of government spending to be dedicated to paying off debt-interest in the same period, we can only look at Canada’s example with admiration as they power out of the global financial crises with a GDP growth of 5.3%.
Britain has a new government and it is a Conservative / Liberal Democrat coalition, the electorate has spoken, and this blog is firm in its conviction that David Cameron is delighted with the result, in fact the outcome could not have been better from his point of view. How can this be so, surely a coalition with a progressive-left party will be a disaster for Dave?
Simple, the Conservatives are fully cognizant of the mortal peril inherent in succeeding a Labour government, for while they may potter along quite happily for a decade or so if propped up by global low interest rates and low inflation, inevitably they end in a train-wreck which the Conservatives have to clean up via wildly unpopular cuts in public spending.