Wednesday 20th of March was budget day for the UK Chancellor of the Exchequer. Not that it is different for the public in any meaningful way. The evening Channel 4 news referred to the “UK zombie economy”. Zombie (according to Wikipedia: The term is often figuratively applied to describe a hypnotized person bereft of consciousness and self-awareness, yet ambulant and able to respond to surrounding stimuli, others call them the living dead).
Ed Balls the shadow chancellor said: “I look at these figures and think the economic and fiscal failure is bleak for our country for years to come”.
The latest growth forecast for the UK was halved from an anaemic 1.2% per annum to an insignificant 0.6%. The yearly budget deficit is running at £120 billion per annum and not improving. The national debt will be over £1.6 Trillion pounds before the end of this government and is fast approaching 85% of GDP. But in the midst of the doom and gloom, supposedly some good news shone through; the monetary policy committee of the Bank of England will be encouraged to keep interest rates at close to zero, ostensibly to give certainty to mortgage holders, and borrowers, but really to keep interest charges down on the ballooning government debt and to increase inflation. The plan is to inflate away debt and cut expenditure by keeping pay and benefit rises to 1% or less. So the public lose by the difference between inflation of 3% (unofficially more than 5%) and the 1% raise they are given. So more bad news in reality.
Growth is the key measure for secular politicians. Notions like poverty alleviation and circulation of wealth which figure prominently in the Islamic world are seldom heard in UK budget speeches. But with respect to growth -which is measured in GDP at the aggregate level – capitalism has clearly shown an inability to provide for all in society. The divisions between the wealthy and poor gets ever wider. Politicians claim that 1 million of new jobs have been created, but many of these are part-time jobs. Since 2008 the number of people underemployed (needing to work longer hours) has also grown by 1 million. More than 3 million are trapped in part-time work. To quote attractive statistics like employment growth and debt reduction, a Machiavellian approach is adopted. Job centres aggressively push the unemployed into cheap part-time work to reduce the numbers regardless of suitability of the work, or whether there really is a job. Similarly, spending is slashed in welfare and other spending groups without regard to real needs but to meet arbitrary targets. Politically sensitive departments like the National Health service and Education are ring-fenced (budgets protected) to assuage public opinion regardless of real need. Billions of pounds are delayed in payments to creditors to push them into the next accounting period! (and the politicians claim success over their spending cuts which are really accounting slight of hand).
If the economy had real incentives to spend and invest, the large mountain of wealth that has been accumulated in the country will be utilised and growth would not be a dream. If governments used wealth oriented taxes as mandated by Islam, and removed the plethora of income, consumption, VAT, business, fuel, national health, council, et el, taxes then people and businesses would have a real incentive to invest and spend rather than saving the wealth and taking it out of circulation.
As the Quran intones in Surah al-Hashr:
“In order that it does not merely make a circuit amongst the wealthy among you” [TMQ 59:7]
Banks and the wealthy sit on many billions of capital and refrain from investing due to the unfavourable economy. They won’t invest until the economy recovers, but in true circular fashion will not recover without their investment! The tired old policies of secular politicians fail to even contemplate the radical solutions which Islam provides, whereby there is a real incentive for the investment and spending of this accumulated wealth (where they will be taxed/levied when not spending or investing the accumulated wealth).
Jamal Harwood, Economics Editor
