In his budget speech the chancellor styled himself as the driver of a three wheel vehicle - “our economic plan combines monetary activism with fiscal responsibility and supply side reform”. The main drawback of this plan is that it’s missing a wheel. This Three wheeler economic plan has no demand side plan, and given that 63% of GDP comes from private consumption this is an oversight of heroic proportions.
|I haven't a clue where I'm going|
Of the three wheels that are fitted the news is not good. The fiscal plan is unchanged - high taxes and very high government spending. Having handed over total responsibility for monetary policy to the new governor of the Bank of England he can stop pedaling on this. Leaving the supply side were he has shown some interest in tinkering with NI and corporation tax to simulate activity, but we still await Vince’s industrial policy to re-balance the economy (three years and no sign). The only conclusion one can draw is that he is happy to be pedaling an economic mono-cycle, with no interest in changing the demand side, monetary or fiscal policies.
Don't slip off the cliff
The FT's Martin Wolf has much more @