Spending squeeze ‘risks creating lost generation’

THE former secretary-general of the United Nations has warned of the “danger” of austerity cutbacks, saying that the hard economic times across the world risk creating “a lost generation” of young people.

In a speech at the Scottish Council for Development and Industry awards in Glasgow, Kofi Annan said the squeeze on spending by governments could “fail to meet their own narrow objectives” if it led to reduced growth.

Annan said it was unsurprising that young people were taking to the streets, in a reference to the Occupy protests ongoing across the world.

“We are seeing young people turning their backs on elections and being attracted by divisive and extreme political philosophies. Their frustration and anger is being driven by the feeling that they are too small to matter,” he added.

Annan’s comments come in advance of UK Chancellor George Osborne’s Autumn Statement next week, in which he is expected to announce he will bring forward £50 billion of infrastructure projects, which will now be given the all-clear immediately.

Osborne is also expected to flesh out plans for “credit easing”, which will see the public sector buying up bonds issued by firms which may be struggling to get credit from banks.

Both Labour and the SNP are pressing for ministers to do more, and ease off on the public spending squeeze to give a boost to the economy, with official forecasts for growth due this week certain to be marked down in the wake of the turmoil in the Eurozone.

It comes as economists warn that the drive to cut debt across Europe by reducing public spending will plunge countries back into recession.

Labour yesterday claimed that Osborne was planning to use the expected public sector strikes on 30 November to take attention away from the economic picture.

Shadow chancellor Ed Balls said: “Rather than trying to use the strikes to distract attention, the Chancellor must make the right choice in the Autumn Statement. He can plough on regardless with a plan that is hurting, but not working to get the deficit down. Or he can stop blaming everybody else for his own mistakes and change course.”