Osborne to IMF: I Told You So Third Year of Expansionary Fiscal Contraction

osborne7

Chancellor Zero is no more. Growth is back, even the neo-Keynesians at the FT and the wonks at the IMF can’t deny that the UK expanded faster than the rest of the G7 last year and will probably do the same this year. George Osborne is in Washington today to gloat that

“despite warnings from some that our determined pursuit of our economic plan made that impossible. All of this demonstrates that fiscal consolidation and economic recovery go together, and undermines the pessimistic prognosis that only further fiscal stimulus can drive sustainable growth. Indeed that is precisely the wrong prescription for our economies…”

Ed Balls got it wrong is the core message. Labour will point to per capita GDP which is still 10% lower than it was in 2007 – that will be a second term objective for the Chancellor. Balls will less convincingly say George has missed his deficit target, less convincing because Labour would have missed it by more and opposed almost every measure needed to reduce the deficit. The neo-Keynesian argument that higher unemployment would increase the welfare bill and thus the deficit has been proven to be wrong. Unemployment is down from what it was under Gordon Brown, with the warnings from the likes of David Blanchflower of 4 to 5 million unemployed having turned out to be political hyperbole that has fatally damaged his career as a sage. That “expansionary fiscal contraction” that left-wing wonks and economists said would never come is entering a third year…

Leading left-wing wonk and wannabe Labour MP Will Straw argued in 2011 that Britain’s economy faced the risk of a Japanese-style “lost decade” and that “expansionary fiscal contraction” was a “voodoo theory”, and even that there was no such thing as an expansionary fiscal contraction. In 2011 Guido argued the point at length with Will on the BBC’s Daily Politics:


Get Adobe Flash player

Having failed at the time to get an on-air apology from Will for his role in Gordon Brown’s Treasury, three years later he must now accept that he was wrong about a lost decade and wrong that there was no such thing as an expansionary fiscal contraction. Over to you Will – as growth is expected to hit 3% you have a second chance to offer an apology…




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

Quote of the Day

Top Corbynista Cat Smith on the general election:

“…we didn’t lose it…”

Sponsors

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.
Hammond Overspending by Just £10 Million an Hour Hammond Overspending by Just £10 Million an Hour
Momentum Soft Smut Snapper Rejected as Labour Candidate Momentum Soft Smut Snapper Rejected as Labour Candidate
All Smiles After Cabinet All Smiles After Cabinet
Who’s The Eye’s Telegraph Mole? Who’s The Eye’s Telegraph Mole?
UK Green Lobby Funded by Anti-Immigrant Multi-Millionaire UK Green Lobby Funded by Anti-Immigrant Multi-Millionaire
Tory Glasto Hosted by Multi-Millionaire Gambling Magnate Tory Glasto Hosted by Multi-Millionaire Gambling Magnate
Hammond and Treasury “On Manoeuvres” Against Brexit Hammond and Treasury “On Manoeuvres” Against Brexit
Osborne Lands Job Number Seven Osborne Lands Job Number Seven
Civil Service ‘Not Really Preparing’ For No Deal Civil Service ‘Not Really Preparing’ For No Deal
Osborne’s Latest Duff Analysis Osborne’s Latest Duff Analysis
Corbynista Journo Banned from Conference Corbynista Journo Banned from Conference
Sheerman’s Shameless Shilling Sheerman’s Shameless Shilling
Carwyn Jones Picks a Winner Carwyn Jones Picks a Winner
Red Robbins: May’s Brexit Supremo is Soviet Sympathiser Red Robbins: May’s Brexit Supremo is Soviet Sympathiser
Owen Goes Full Brent Owen Goes Full Brent
What Caused Rachel Sylvester’s Volte Face? What Caused Rachel Sylvester’s Volte Face?
Labour Moderates Screwed Labour Moderates Screwed
WATCH Boris: “I’m Not Resigning” WATCH Boris: “I’m Not Resigning”
Corbynistas Seek Right to Suspend NEC Elections With “Venezuela Amendment” Corbynistas Seek Right to Suspend NEC Elections With “Venezuela Amendment”