WESTMINSTER politicians have not learned the lessons of the 2008 financial crisis, Ian Blackford has said, as he warned that inflation will do “lasting damage” to living standards across the UK.
The former SNP Westminster group leader, who announced last month he would be standing down at the next election, claimed the crash in 2008, which saw Britain’s GDP fall by 7.4%, established the conditions for the current economic problems.
Blackford criticised successive Tory Governments for “balancing the books through the pockets of the poor” in an interview with Scotland on Sunday.
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“In many respects the problems we face today are because of the wrong choices that were made then, we are now paying the price for that,” he said.
“If you think about where we are today, the young generation are the first in 200 years to be worse off than their parents.
“We are going backwards in terms of living standards, young people have a mountain of doubt, there’s high mortgage costs, and most of the UK has student debt or fees. It’s an enormous burden that young people are facing.
“What we have faced since 2008 is an inability by the tail end of a Labour Government, then the coalition and now the current Government to deliver sustainable economic growth.
“The demands on the public purse are so great but we are not growing taxation receipts to meet the needs of people.
“The failure for that goes right back to the financial crisis. We did the right thing in bailing out the banks, if we hadn’t we would have all paid the price.”
The Ross, Skye and Lochaber MP said that issues began to arise due to the quantitative easing program deployed in 2009.
Banks bought bonds to push up their prices and bring down long-term interest rates, but Blackford explained this instead drove up asset prices, basically helping those who were already well off.
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“Those that had assets, those that were wealthy did extremely well. We had all that money from easing, that drove up these asset prices, but we had fiscal tightening at the same time,” he said.
“The most vulnerable paid the price for austerity, while those who had economic assets were protected.
“We have seen just a complete mismatch between monetary policy and fiscal policy. You never cut your way out of a recession.
“What we needed to do was have that old fashioned stimulus for the economy, that would have delivered investment in the private sector, increased productivity, lifted living standards, and generated tax receipts to pay off the debts. It is a failure of public policy that we are still feeling”.
Comparing the 2008 financial crisis to the current economic situation, the SNP MP claimed it has left public finances so stretched that there is no investment in health and education and wages are being “squeezed”.
Blackford added: “All of us want to get inflation down, it does make people poorer, so there’s a real danger unless we drive inflation down, this is going to do long and lasting damage to people’s living standards.
"Interest rates will stay high for longer, they may remain for a considerable time, and not reverse very quickly.”
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