Budget murky on unemployment projection

March 4, 2010 5:20 p.m.

The budget is out and there is a lot of information on the debt and deficit ratios to GDP and the numbers of jobs created by the economic action plan.But so far and I have looked and scanned the documents quickly, I see very little specifically on projecting unemployment rates over the next twelve months. But this projection is critical in making sense of the deficit projections and in assessing how effective the plan is likely to be in achieving its goals.

Obviously a projection of 7.0 % unemployment at year end is rather different from a projection of 6.5 % or even 6 %. The details are needed so a proper analysis can be made.

Aha, after a second look at the first   budget document I have found the table I was looking for.It is quite frankly the most important table in the budget. It gives a consensus of private sector forecasts and the budget's own projections on unemployment over the next seven years.

The projections clearly show that unemployment is expected to remain far too high to allow the government to safely slash government expenditures without generating higher unemployment and prolonging the miserable consequences of the recession.

The projected unemployment rates are as follows: 2010   8.5 %; 2011 7.9 % ;2012   7.4 %; 2013 6.9 % ;2014  
6.6 %; and 2015   7.6 %.

Clearly projections for years from now are rather unreliable. But none of these projected unemployment rates are low enough to justify austerity cuts and certainly not the cuts laid out in the budget.

This is particularly true of the projected cuts to the defense budget which needs to be maintained in order to rebuild the military and resupply it after its arduous and brave service in Afghanistan.

The opposition parties and the media ought to ask some very tough questions about the thinking that lies behind this budget in the light of these unemployment projections.