The UK’s austerity policy is ideologically driven and is aimed at diverting finance from the poor to the rich under the pretext of the economic crisis, writer John Wight told RT.

Britain's Chancellor of the Exchequer George Osborne is announcing billions more in the government spending cuts while austerity measures are already biting for many people across the UK.
Osborne claimed that British economy is “out of intensive care.” RT asked Wight if he thinks that is really the case.

John Wight: Only in a fine world of the Tory party would that be the case. The country’s seen 1.1 percent growth in the last three years – the worst level of growth in this country’s economy over the last 100 years. That can by no means be considered a success. 

RT: Who's going to be the most affected by these latest cuts?

JW: Clearly the poor are going to be hit harder as a continuation of the mass experiment in human despair, which this coalition government has cheated to describe as an economic policy. It is ideologically driven and we see economics of the madhouse. And it is done with the objective of affecting the transference of wealth from the poor to the rich under the pretext of an economic crisis – not reason, it’s a pre-text. The economic crisis which hit this country in 2007 was their economic 9/11.

RT: Official figures show the deficit has been growing last year, despite previous cuts. So is there any point to them?

JW: Well, that’s what I’ve just said: this is ideologically driven. If you are considering these policies on the basis of economics, then clearly it is completely irrational. The US economist Paul Krugman lately described it as “a medieval doctor draining a patient’s blood,” and when that doesn’t work, draining more blood from the patient. This is entirely appropriate to describe this economic policy, this austerity. Austerity historically has been discredited. It doesn’t work in times of recession. At a time of recession the government needs to spend more to reintroduce the man which is contracted as profits stumble. And you must place this along the fact that the Office of Financial Statistics, the government’s own body set up to monitor these things, came up with a figure in April which stated that in the final quarter of last year UK businesses, excluding banks, were sitting on 318 billion pounds of surplus. And that money is money we need in the economy. They are not investing, they spend all the inducements from the government by the way of tax subsidies and tax cuts for the rich that the government has given to the rich over the last three years. 

RT: What do you think is the best way that the government can fight the deficit?

JW: It has to start investing in the real economy. It has to start directing banks to lend rather than pleading with banks, especially banks in which we own a majority share, such as RBS. The government should take over RBS’s operations and start lending in the interest of the real economy. The economy needs it. We have a housing crisis in the country, it’s the worst in the world, it’s a scandal. And we need to start investing in affordable homes. Rather than punishing the poor for being poor we should start actually diverting money from the rich to the poor, as befitting a civilized society. 

RT: Osborne announced cuts to the police budget. Do you think that will affect the crime rate?

JW: Well, not really, because based on what we know now a lot of criminals are actually in the police. They are also sitting in the boardrooms and in the House of Lords. It may have an effect. But I think they’ve consolidated the police and taken away the regional power from the police. It is yet to be seen. But as I say the cuts in the police budget are minimal compared to the cuts for the poor in terms of benefit cuts and so on.

Mixed sentiment on global floors, uncertainty in the Asia-Pacific region over the Chinese credit crunch and falling oil prices looked likely to drag Russian stocks down on Wednesday’s opening. However the floors started off the day with slight gains.

Tuesday’s trading session took Russian indicators higher with the MICEX having added 0.57 percent to 1297.59, and the RTS finishing up 0.9 percent at 1244.16.

Russian floors are also likely to react to Tuesday’s good news from the US in Wednesday’s trade. Tuesday's US data showed strong gains in business spending plans. Also US home prices posted record gains, indicating that recovery may be on track in the key sector of economy.

Europe's main stock markets have rebounded on Tuesday. London's FTSE 100 index of leading shares advanced 1.21 percent to close at 6,101.91 points, Frankfurt's DAX 30 index climbed 1.55 percent to 7,811.30 points, while in Paris the CAC 40 gained 1.51 per cent to 3,649.82 points.

The data took US stocks up, with the Dow Jones Industrial Average adding 0.69 percent to 14,760.31.The S&P 500 added 0.95 percent closing at 1,588.03, while the NASDAQ rose 0.82 percent to 3,347.89.

Asian stocks were mixed on Wednesday as investors in the region’s key markets Japan and Mainland China continued to worry about a liquidity crisis spurring in the world’s second-largest economy, despite reassurance from China's central bank.

Moody's ratings agency said a prolonged credit crunch endangers Chinese companies, “especially those in the private sector with weak credit quality, because it heightens the risk that banks will scale back lending to those companies.”

The Shanghai Composite Index fell 1.2 percent to 1,937.17. Japan's Nikkei 225 fell 0.9 percent to 12,904.01. In Hong Kong, the Hang Seng gained 0.8 percent to 20,022.30. South Korea's Kospi dropped 0.1 percent to 1,778.26. Australia's S&P/ASX 200 gained 1.3 percent to 4,714.40.

Oil is currently trading lower with Brent losing 0.5 percent to $100.70, and WTI down 0.9 percent to $94.40.

Mario Tama/Getty Images/AFP

 Russian stock market has opened on the positive territory on Tuesday, rebounding after Monday’s drop.

Investors however expect stocks to fall later in the day, as oil prices are declining and the international outlook remains negative on China liquidity crisis and concerns over Fed’s stimulus.

Russian stocks ended Monday with losses. The MICEX slipped 0.66 percent to the 1290.26 mark, while the RTS lost 1.02 percent to 1233.04. Equities of KAMAZ, Novatek, InterRAO, Rosneft and E.On Russia kept Russian market trade afloat with gains.

Major European stock markets also slumped Monday, reacting to worries over the Chinese liquidity crisis and the withdrawal of US Federal Reserve stimulus.

London's FTSE 100 index of leading shares slid 1.42 percent to 6,029.10, while Frankfurt's DAX 30 fell 1.24 percent to 7,692.45 points. In Paris the CAC 40 dropped 1.71 percent to 3,595.63 points.

Stocks in Spain and Italy also fell on rising Italian and Spanish state borrowing costs on the bond market.

US stocks ended Monday’s roller coaster trade with steep declines. Benchmark stock indices demonstrated a steep fall after the opening bell.

The Dow Jones Industrial Average had been down as much as 250 points on Monday ending down 139.84 points, or 0.9 percent, at 14,659.56.

The S&P 500 finished down 19.34 points, or 1.2 percent, at 1,573.09, with all of its 10 major sectors in negative terrain. The NASDAQ closed down 36.49 points, or 1.1 percent at 3,320.76, following an intraday low of 3,294.95 and a session high of 3,344.66.

Tuesday’s news from Europe will include the UK’s industry data on mortgage approvals, reflecting the demand in the housing sector. Bank of England policymakers are to testify on inflation and the economic outlook before the parliamentary treasury committee, Investing.com reports.

Also on Tuesday Italy is to hold an auction of 10-year government bonds.

The US is to publish official data on durable goods orders and closely watched reports on consumer confidence and new home sales later in the day.

Asian stocks were struck by worries over problems in the Chinese banking system. Mainland Chinese stocks fell sharply for a second straight day on Tuesday. Losses hit markets in other Asian regions as well.

The Shanghai Composite lost 3.8 percent to 1,888.69 and Hong Kong's Hang Seng dropped 1.4 percent to 19,533.05. Japan's Nikkei 225 shed 1.6 percent to 12,848.96. South Korea's Kospi slid 1 percent to 1,780.81 and Australia's S&P/ASX 200 declined 0.5 percent to 4,645. Stocks in Taiwan and the Philippines also fell.

Brent oil is currently trading at $101.35, while WTI is up 0.17 percent, trading at $95.30.