The Institute for Fiscal Studies (IFS) has warned that there will need to be “colossal” cuts in public spending to balance the books by 2018-19 – at least £55bn extra. On 4 December, the day after the Chancellor’s Autumn Statement, the director of the IFS, Paul Johnson, said that it wasn’t for lack of effort that the deficit hasn’t fallen. Rather, it was “because the economy performed so poorly in the first half of the parliament, hitting revenues very hard”.
Very true – but what Johnson omitted to say was that the main reason the economy performed so poorly in the first half of the parliament was because George Osborne was busy cutting the deficit. He should have been expanding it!
This is something that expert commentators lack theContinue reading...
I concentrate on one point: the Chancellor’s failure to meet his budgetary targets.
Growth has been revised up to 3% this year, to be followed by 2.4% 2015, 2.2% in 2016, 2.4% 2017, 2.3%, 2.3%, 2.3% 2019, and so on.
These estimates are not worth the paper they are written on, being conditional on all sorts of things unlikely to happen.
Their importance lies in the fact that they are the basis of the budget projections.
In 2010 Osborne forecast growth of 2.3% in 2010-2011, 2.8% 2011-12, 2.9% 2012-13. In fact it was 1.6% 2010-11, 2011-12, 0.7%, 2012-13 1.7%.
According to the Chancellor economy should have grown by 8.2 compounded; in fact it grew by 4.1%.
No wonder his deficit reduction plans went awry.
Agreed, that it was notContinue reading...
Robert Skidelsky spoke several times at the Post-Keynesian conference in Kansas this year, giving talks on the future of work and the future of economics education, and participating in a discussion on what we should have learned from the global crisis (with Prof. Bruce Greenwald).
You can now watch all these at the Post-Keynesian Conference website, here: www.pkconference.com/2014-2/videos-2014/
When I recently met Irish President Michael Higgins – sharing a platform for a speech in which he connected his newly launched “ethics initiative” to a book I co-wrote with my son, How Much is Enough? Money and the Good Life – I was struck by his devotion to thought. Indeed, engaging with ideas is a passion for Ireland’s poet-president – one that more heads of states should take up.
Last May, Higgins told economics students at the University of Chicago that they were studying a deformed discipline, torn from its ethical and philosophical roots. “The recent economic and financial upheavals,” he declared, “have thrown a glaring light on the shortcomings of the intellectual tools provided by mainstream economics and its key assumptionsContinue reading...
Ministers are up to their old game of blaming everyone but themselves for Britain’s economic woes. First, they said they were “clearing up the mess” left by Labour. When recovery stalled in 2010, it was because of the Greek crisis. Now David Cameron warns of a new recession even before it has happened– because Europe is not doing its job of recovering properly.
Cameron is right to warn that the world is on the brink of a third recession. But he is wrong to say that this makes it even more necessary for Britain to stick to its “long-term economic plan” of deficit and debt reduction. Because it is these deficit and debt-reduction policies, implemented throughout the European Union, that have been causing the “red lights” of recession toContinue reading...