George Osborne is attempting to slash a £130bn deficit over 7 years. The OBR says we have, on top of this, to cut £17bn over 50 years. Are we going to swallow the camel and strain on the gnat?
The OBR’s central assumption is that net inward migration will fall to about 140,000 a year (it is presently around 250,000) and remain there over the next five decades. But what if immigration, instead, remained at present levels for that period?
Let’s imagine that the Fiscal Compact was up and running and that Britain had signed up. That would mean that the Government would technically be liable for big fines for failing to hit those Commission mandated targets. And if it wanted to avoid those fines it might have had to tighen fiscal policy further, by about 0.5% of GDP per year (or around £7.5bn)
“The big emphasis on theory in many UK economics departments has been a mistake as it seems to have little impact and has done little or nothing to improve the human condition” argues The Independent’s columnist.
The euro summit statement says that, as a result of the deal, the Greek debt to GDP ratio will come down to 120% by 2020. Does anyone seriously believe that Greece can sustain a debt load on this scale?
The benefits, both from trade and migration, are not just marginal or “nice-to-have”. For a small, open, service-based economy like the UK, they are essential to any growth strategy worthy of the name.
Our economy is much larger than today than it was in 1979. A better metric for comparing deficits over time than cash borrowing is borrowing as percentage of GDP.
I’m not quite sure if I can take any more. First that nasty and very unexpected fall in GDP this morning…
The City economists still don’t know quite what to make of the shockingly bad GDP figures. According to the official statisticians, if it hadn’t been for the snow then GDP would have been flat in the last three months of 2010 rather than falling by 0.5 per cent – but that is still very bad and suggests an underlying weakness in the economy.
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