Which is the appropriate baseline for evaluating the distributional impact of the Coalition’s fiscal policies? The answer to that question would seem to be obvious.
If interest rates were to rise to around 2.5 per cent few savers would spend more. But, by contrast, many borrowers would spend less according to Bank of England research.
A counterfactual economy without either monetary or fiscal loosening would probably have involved spiralling deflation and financial implosion, ending in total economic and social collapse.
Not when set in a domestic historical context. And our productivity performance has still been dreadful.
If Jeremy Hunt had used the day-to-day measure of spending his political point about Labour’s plans would have been blunted.
Scotland’s banks have vast balance sheets, worth more than twelve times the country’s £150bn GDP. The fiscal position of an independent Scotland could look better if they did re-domicile.
Public service spending per head in Scotland is is higher than in England. But it’s lower than in Northern Ireland and some English regions.
By citing the OECD view of the size of the structural deficit in 2007, and then sticking to the IFS narrative on the pace of austerity the Treasury seems to be guilty of cherry picking.
The Conservatives will claims this upgrade as a vindication of their economic strategy. Critics will point out that growth would have been still higher without George Osborne’ front-loaded fiscal austerity. No change there then.
Net trade could easily slip from making zero contribution to growth to being an outright drag over the coming years.
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