Is our obsession with the cuts blinding us to the oil shock?
The BBC’s Evan Davis made a very interesting point when interviewing Labour’s Shadow Chancellor Ed Balls this morning on Radio 4. Trying to wrongfoot Balls, the economically astute Davis stated that the 1% impact on consumer spending from Chancellor George Osbourne’s cuts was much smaller than the 1.5% impact from what he called the ‘oil shock’.
I was, ironically, driving to a client’s site at the time and nearly swerved off the road. I have always believed that oil prices were hurting the recovery, but I didn’t realise just how much an effect they were having.
We have pages and pages of newsprint and hour after hour of broadcast on the political battle between Osbourne and Balls over public spending, but almost nothing on oil prices. If Davis is right, and he most probably is, we are barking up the wrong tree. If we want to get the economy running again, weaning ourselves off our addiction to oil
should must be much higher up the agenda.