CIPD gloom and doom is wrong, says IoD

Dated: 2 November 2010

Responding to the CIPD’s claim of 1.6 million job losses on the horizon, Graeme Leach, Chief Economist and Director of Policy at the Institute of Directors, said:

“The CIPD’s gloom and doom about the Spending Review ignores key facts. Taking ‘soundings from public sector managers’ is not a substitute for economic research.

“The Lamont-Clarke fiscal squeeze in the 1990s resulted in 600,000 public sector job losses but this did not prevent the longest expansion on record from becoming established. The Brown spending squeeze at the end of the 1990s coincided with one of the fastest periods of GDP growth in the last 20 years. The spending squeeze under the first 2 years of the Coalition is actually less than under the first 2 years of New Labour! The CIPD’s analysis is alarmist and risks talking ourselves into a double-dip recession.

He added:

“The UK economy faces a difficult period over the coming years, but if the Government holds firm with the implementation of the Spending Review long term growth and employment prospects will be significantly improved. However, if the Coalition wobbles and the Spending Review begins to unravel, long term economic prospects will be very poor.

“This is why it is so dangerous for the CIPD to make headline grabbing forecasts which are based on little more than a guess. Nobody can be sure what the future holds, but recent economic history suggests projections of 1.6 million job losses are hopelessly inaccurate. We should remember that the private sector was able to create 300,000 jobs in the latest quarter alone.”

IoD members strongly support immediate public spending cut, and took this view before the general election.

In a survey of 1,500 IoD members (conducted from 26 February until 4 March 2010):

  • 86 per cent said that current levels of public sector spending need to be reduced.
  • 72 per cent said that significant cuts should start in 2010.
  • 71 per cent said that addressing the deficit was the top priority of the new Government in its first 100 days.

In a survey of 640 IoD members conducted immediately after the June emergency budget, which set the Government’s overall deficit reduction strategy:

  • 83% felt that the emergency Budget would have a positive impact on the UK economy

ENDS

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Edwin Morgan
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Email: edwin.morgan@iod.com
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Notes to editors

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