Cuts need to be deeper warns Moulton
VETERAN investor John Moulton claims the spending cuts introduced by the coalition government are “too little, too late”, and that if future generations are not going to suffer, more aggressive cuts are required.
The outspoken former head of Alchemy Partners, who founded listed investment business Better Capital last year, also told North West business leaders that he believes a break up of the euro is “probable” in the next two years because of the debt crises in Ireland, Greece, Portugal and Spain.
He said the recent EU bail-out of the Irish economy is: “At best a temporary affair – the market is expecting failure.”
Mr Moulton’s hawkish stance has since been echoed by Stephen Nickell, of the Government’s Office for Budget Responsibility and a former Bank of England rate-setter, who a collapse of the single currency was “a possibility”.
Speaking at the CBI North West annual awards lunch last week Mr Moulton warned that future generations did not deserve to be shouldered with this generation’s debts.
“It will be more morally honest to cut now. Our kids don’t deserve our debts.”
He acknowledged this would be deeply unpopular adding: “We have seen all the protests about child allowances and sport in schoolsd, and yes it’s easy to back off and become more popular, and there will be opposition from unions and students to cuts, but it will ne better for the country to take more pain now.
“Yes it will mean more unemployment and business failure, but I believe it will lead to a much better platform for growth.”
He said the government would have to be both “courageous and cohesive” in implementing the current round of spending cuts and more in the future.
Mr Moulton argued that the current low level of corporate failures was “not entirely good news”,adding: “Many enterprises that should have perished continue to trade. The capitalist society needs failures – there will be assets and people who will do better under different ownership.”
He claimed this ‘unhealthily low’ level of corporate failure was related to banks’ and governments’ on both sides of the Atlantic being “unwilling to take the pain”.
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