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 @
http://www.ft.com/cms/s/0/240a9dca-90b8-11e2-a456-00144feabdc0.html#axzz2OBo4oWOz
http://www.ft.com/cms/s/0/240a9dca-90b8-11e2-a456-00144feabdc0.html#axzz2OBo4oWOz
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