Robert Skidelsky
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Parliament

Recent Articles

Do Labour and the Conservatives understand that austerity is bad for growth?
Robert Skidesky
Friday, April 17, 2015

 
At last official forecasting bodies are starting to understand the link between fiscal policy and economic growth. Since the slump started in 2008 they have mostly overestimated growth, by not recognising how much austerity reduces it. A £100 cut in public spending does not reduce borrowing by the same amount, because it cuts something off the economy too, and therefore off the government's tax revenues.

A survey of 23 countries (Laurence M. Ball, NBER Working Paper 20185) found that the Great Recession reduced potential economic output by an average of 8.4%; that is, the economies surveyed would have had 8.4% more output by now had the recession not occurred. It concludes that, “the total damage of the Great Recession is slightly larger


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Conservative Election Manifesto
Robert Skidelsky
Wednesday, April 15, 2015

 
The Conservatives have continued to spin their familiar yarn of having rescued Britain from ‘Labour’s Great Recession’. This, as they must know, is the mother of all lies. The Great Recession was caused by the banks. Governments, the Labour government included, by bailing out the banks and continuing to spend, stopped the Great Recession from turning into a Great Depression. Yet practically everyone seems to believe that the Great Recession was manufactured by Gordon Brown.
 
The Conservatives claim that ‘by halving the deficit we have restored confidence to the economy’. This cheerfully ignores the near academic consensus that their deficit-reduction policies over the last 5 years have made the British economy between 5 and 10%

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Labour’s deficit of clarity
Robert Skidesky
Tuesday, April 14, 2015

 
The dismal concentration on budget cuts continues to dominate Britain's general election. In yesterday's manifesto, Labour promised to ‘cut the deficit’ every year. Ed Balls must know this pledge is economically illiterate. Labour must be clear - it is not the size of the deficit which matters, but its share as a percentage of GDP. Let’s take the pledge in this, its only economically literate sense.   
 
Labour cannot give a promise to ‘cut the deficit’ every year in good faith. The share of deficit in GDP depends on what is happening to GDP, including the effect of the cuts on it.
 
Suppose the government decided to cut transfer payments by £10bn. The recipients of such payments will have £10bn less to spend. Their reduced spending will

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General elections are depressing events
Robert Skidesky
Monday, April 13, 2015

 
General elections are depressing events, especially for those naïve souls looking forward to some enlightenment. Economic discussion fares particularly badly. It’s not just that it is cliché ridden, but that the clichés are the opposite of the truth.
 
Take today’s FT (13 April) which reports plans by Liberal Democratic leader Nick Clegg to ‘balance the nation’s books’ by ‘eradicating the current structural deficit’.
 
Either Mr. Clegg or the reporter Elizabeth Digby, or probably both, thought that balancing the government’s books was the same as balancing the nation’s books. At least Mr. Clegg never gave a hint of having thought about what the relationship between the two ‘books’ might be. He blundered on about ‘finishing the job of

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Budget Speech, 25th March 2015
Monday, March 30, 2015

 
 My Lords, at the time of his first Budget in June 2010, the Chancellor said:
 
“The most urgent task facing this country is to implement an accelerated plan to reduce the deficit”.
 
He committed himself to achieving a “cyclically-adjusted current budget balance”—the relevant part of that deficit standing at 4.8%—by the end of this Parliament.Instead, today, we still have a deficit of 2.8%. Of course, as a good politician, the Chancellor left himself wiggle room by talking about a “rolling five-year period” for achieving his goal. We are still rolling, but always “on target”. In last week’s Budget Statement he said that he will hit his original target three years late. He is like the runner, who, when the race is finished, gets to decide

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