To Grow Faster, Go Further

Growth is anaemic, that much of the Balls critique is true, the cause is not the government’s spending cuts, they have barely started, the £6 billion down payment on deficit reduction is not even 1% of GDP. Some of the reasons are external; US economic doldrums, Japanese earthquake related supply-chain disruption, cost push inflation and some are internal; lack of business and consumer confidence, difficult credit markets and rising interest rate expectations. So what is to be done?

The IMF report recommends

“…tax cuts are faster to implement and more credibly temporary than expenditure shifts and should be targeted to investment, low-income households, or job creation to increase their multipliers… Simultaneous adoption of deeper long-run entitlement reform would be desirable to safeguard fiscal sustainability and market confidence…”

It also points out that

“The level of public spending as a percentage of GDP in our forecast has reduced by about half a per cent of GDP as compared to the previous fiscal year. However, it remains very far above the pre-crisis levels of spending and represents a long-term high in spending. It’s important to maintain that perspective”

Plan B, the Balls plan, is for higher taxes and more spending, the same plan Brown had which took us to the brink of bankruptcy with the biggest government deficit in the G20. That can be dismissed as a failed ideology, now tried for 13 years and tested to destruction. If faster growth is required the IMF actually recommends an accelerated Plan A, “Plan A+”, cutting taxes for those on low-incomes, cutting welfare payments to those who are healthy yet on long-term unemployment benefits and cutting overall government spending back to where it was before Gordon. The UK is cutting public spending slower than Obama and at a rate slower than even the EU average.

The IMF’s Plan A+ to boost growth should be considered along with supply-side reforms to boost business confidence, if we rolled back government spending there would be more room for income tax cuts to boost consumer confidence. If we want more private sector jobs and to grow the economy fast and sustainably, Plan A+ makes sense. Preferably sooner rather than later.




Tip offs: 0709 284 0531
team@Order-order.com

Quote of the Day

David David responds when asked if he’s confident he can make a success of Brexit:

“Why on earth could it go wrong?”

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.

Facebook

FULL-LENGTH TRUMP INAUGURATION SPEECH FULL-LENGTH TRUMP INAUGURATION SPEECH
Farage Hired by Fox News Farage Hired by Fox News
UKIP Announce Nuttall for Stoke UKIP Announce Nuttall for Stoke
Osborne Buries BlackRock News Osborne Buries BlackRock News
UKIP Out-NHS Labour in Copeland UKIP Out-NHS Labour in Copeland
Labour Copeland Candidate’s Son is True Lad Labour Copeland Candidate’s Son is True Lad
Govt Cancels Carbon Capture Govt Cancels Carbon Capture
Seamus Officially Leaves Guardian Seamus Officially Leaves Guardian
Article 50 Splits Shadow Cabinet Article 50 Splits Shadow Cabinet
Revenge Porn Momentum Candidate Quits Revenge Porn Momentum Candidate Quits
Red Len’s Hospitality Hypocrisy Red Len’s Hospitality Hypocrisy
Momentum Man is Porn Baron Momentum Man is Porn Baron
PMQs Sketch – Labour MPs Googling Museum Directorships PMQs Sketch – Labour MPs Googling Museum Directorships
NEC Fudges Danczuk Decision NEC Fudges Danczuk Decision
Investigation: Wrecking Peers in Pay of Unis Investigation: Wrecking Peers in Pay of Unis
Bromentum: All Male Shortlist Bromentum: All Male Shortlist
Nuttall Set to Stand in Stoke Nuttall Set to Stand in Stoke
One Line Whip As Whips On A Jolly One Line Whip As Whips On A Jolly
Leaving The Protectionist Union Leaving The Protectionist Union
Labour Drops Student Anti-Semitism Probe Labour Drops Student Anti-Semitism Probe