Saturday, October 25, 2008

Thanks for the support, Chris

It was nice to see a solid defence of the government in the Guardian yesterday
'nothing merits the sort of intemperate scaremongering that Cameron and
George Osborne have been whipping up' Cameron said on Monday: "We ought now to be cutting people's taxes to put money back into the economy, but we can't because they've got the biggest budget deficit in the modern industrial world." And in his big economic speech last Friday: "[Brown] borrowed and borrowed and borrowed, and racked up the biggest government deficit in the developed
world.


This is just wrong, plain and simple. There is no conceivable way in which the UK budget deficit - whether measured in cash, as a percentage of GDP, or in cowrie shells - is the biggest in the developed world. In cash terms, both the US and Japan outborrow Britain by billions. Sized by each economy, the UK deficit looks entirely unexceptional

In fact, our debt is lower than France, Germany and the USA, which have a national debt of over 60% of GDP. Japan is the market leader at 180% of GDP, leaving us firmly in the minor league. Indeed, thanks to prudent management, at the start of this century, we'd actually reduced it to 30% of GDP. The latest estimates put it - including the temporary risk of the banks - at around 50% of GDP, so there is actually room to manoeuvre in borrowing terms.
But there is also a wider cost if the public begin to believe that the state is impotent to steer us through the tempest ahead. In reality, the government has substantial leeway to help maintain activity. The UK is better positioned to use fiscal policy to stabilise output than at the onset of the 1973 or 79 recessions, albeit a little less so than ahead of the 91 downturn. It is frankly irresponsible of the Tories to pretend otherwise. By international standards, the UK's public finances remain in relatively good order. The Tories should not talk Britain down.

Can't argue with that Chris. Good to see the Lib Dems being truly bipartisan on the matter - I've actually got some respect for that view. He's making the point that Cameron is running with this line to ensure party discipline - arguing that the economy is screwed and that there is no steering room silences his internal opponents arguing for tax cuts, as those tax cuts would have to be generated through unpopular service cuts.

If we let the Tories get away with their particular brand of the truth - as they have tried to push on crime, education and health - then we're failing fundamentally politically.

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