Terminator lV: New UK Government

Fired_stamp

Well someone has to lead the way, but it’s kind of surprising that the British might be the ones.

The Times has a story that puts the likely loss of government jobs in the hundreds of thousands as a result of new austerity measures.

Detailed research by The Sunday Times shows that at least 300,000 workers, including civil servants and frontline staff, will lose their jobs over the next few years.

Some estimates suggest that the number of job losses could reach 700,000. These will include tens of thousands of health service managers as well as many thousands of doctors and nurses, according to internal documents from the National Health Service.

Three out of the 10 strategic health authorities have disclosed that they will reduce their headcounts by a total of 30,132, an average of 8.7%. If these cuts were replicated nationwide, the total job losses would amount to 120,000.

A similar analysis of 75 local authorities suggests that at least 100,000 council workers across the country will lose their jobs.

Thousands of police officers and their civilian support staff will lose their posts, with the Metropolitan police alone forecasting 445 job cuts.

About 20,000 jobs will be lost at the Ministry of Defence as the department faces a demand to reduce its administrative costs by 25%. Ministry insiders say the cuts are set to hit military personnel, including some frontline soldiers.

The article also notes that funding for quasi-governmental organizations (what we loosely call NGOs) will be slashed.

Ministers are promising a “bonfire of quangos”, which over the past 13 years have become bywords for Whitehall waste and political cronyism.

The organisations set to be axed include the Qualifications and Curriculum Development Agency, which employs 723 people, the South East England Development Agency, which has 270 staff, and the 40strong Infrastructure Planning Commission.

The Skills Funding Agency, which employs 1,200 people, is also likely to be closed, along with the Higher Education Funding Council for England. They will be replaced by a new Council for Adult Skills and Higher Education.

Vince Cable’s Department for Business, Innovation and Skills will bear the brunt of the initial cuts, making savings of £900m.

A few thoughts, all of them wildly speculative:

  1. Can the new UK government pull this off. It’s one thing to propose it, quite another to bring it about.
  2. How dire is the situation in Britain? Have they concluded that they’re near the end of the rope when it comes to raising money in the credit markets.
  3. This would seem to radically alter the options available to the PIGGS. If the UK is going down this road how can they not follow?
  4. What does this do the argument for fiscal stimulus now and structural reform later? Taken at face value, they seem to be saying that they’re ready to take their medicine now.
  5. Does this change the political argument in the US? The implications apply to both the states and the federal government. I think that it might have more import for the states.
  6. Is this a stake through the heart of a move towards greater Euro control of national finances. Certainly arguments for QE, guaranteeing bank debts and other stimulative measures are going to find this a headwind.

Nothing like a little weekend drama.

(ht: Calculated Risk)

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