Sense on Cents

Spending money one does not have and making promises one can not keep is no way to run a business let alone a country.

The changing of the guard at 10 Downing Street has also brought about a change in the willingness of the British government to face these realities. The reality of the British economy may not be pretty but it is real and it will not change based purely upon false hope and government artifice.

The Financial Times highlights the ‘tough love’ and ‘financial rigor’ that the regime of new British Prime Minister David Cameron is serving the British populace.

The FT writes, UK Watchdog Slashes Growth Forecasts,

George Osborne will have to frame his budget next week against the backdrop of significantly weaker economic forecasts, making the process of deficit reduction all the more difficult.

The new and independent Office for Budget Responsibility on Monday cut the forecast for growth in 2011 and in subsequent years as it assessed the previous outlook for the economy as too rosy.

Instead of predicting the economy would grow by 3.25 per cent in 2011 and by 3.5 per cent in the subsequent three years, the OBR cautions that growth is likely to be only 2.6 per cent next year and an average of 2.7 per cent into the medium term.

This is clearly bad news and disturbing to British economists and businesspeople, correct? Think again.

Business groups and City economists generally welcomed the report.

Richard Lambert, CBI Director-General, said: “This report injects a welcome dose of credibility and transparency into the fiscal and economic growth projections. The forecasts for economic growth and the deficit are now in line with our own, and confirm the view that the recovery will be slow and protracted.”

What do businesspeople want? Transparency, credibility, and integrity in the process of making evaluations so they can plan accordingly. Not unlike a parent informing his child to give him the truth so he can parent effectively, the British businesspeople want the truth and are pleased by these newly credible reports.

Why and how can’t we receive the same does of credibility and integrity here in America? I truly believe our economy would improve if the wizards in Washington began to be honest in their reporting on and managing of our economy.

America can handle the truth. It is high time Washington starts providing it.

LD

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