Coffee House

Osborne banks the recovery – and whacks his critics

11 April 2014

8:49 AM

11 April 2014

8:49 AM

A few months ago, colleagues of George Osborne were worried the Chancellor risked ‘banking the recovery’ too early. If they’re still worried about that, then Osborne certainly isn’t. Today he’s delivering a speech attacking economic pessimists who he says can be proven wrong: ‘Our nation’s best days lie ahead’. He will say:

‘The evidence increasingly shows that monetary policy, broadly defined and effectively deployed, can work but with two caveats. Banks need to be well capitalised so that the monetary transmission system is working. And there needs to be credible fiscal policy.’

His speech will also characterise what ‘proponents of secular stagnation’ argue for: ‘further fiscal stimulus and higher government debt’.

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Who is the Chancellor talking about here? Well, Ed Miliband has been out and about ‘ridiculing‘ the Government’s claims that the economy is mending. He still thinks that there are sufficient numbers of voters who still feel as though life is very tricky (and for whom a ‘savings revolution’ in the recent Budget seems rather pointless when they’re trying to spin their pay check out to the end of the month, let alone put away £15,000).

But Osborne is delivering this speech in Washington, where he is attending the spring meetings of the IMF and the World Bank. The IMF is once again a wise and prescient organisation after it upgraded Britain’s growth forecast for this year to 2.9%, making it the fastest growing of any of the G7 economies. Osborne wants to remind the organisation of the ‘playing with fire’ remarks of its chief economist Olivier Blanchard. Osborne wants to bank the recovery for sure – and bank that he was right about it, too.


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Show comments
  • DaveTheRave

    They can quote any figure they like, there’s no good feeling happening ‘out there’, only increasing anger about not getting the governments we want. People voted Tory to get a vote on the EU NOW, to stop mass immigration NOW. What did we get?A pact with the LibDems who are neither liberal nor democratic and reneged on their ‘promises’ to get power. We’re just naive, aren’t we? Whatever happened to ‘vote blue, go green’? We’re back to that old talk of economic growth, which, if it were to happen worldwide would hasten the demise of the planet… according to some.

  • ohforheavensake

    And here’s a very detailed blog post by a reputable economist, which shows in detail why Osborne’s got nothing to crow about-

    http://niesr.ac.uk/blog/fiscal-policy-plan-and-recovery-explaining-economics#.U0giveZdWRM

    • HookesLaw

      There is no such thing as a reputable economist. Only opinionated ones. And if you read the comments you find someone making pertinent arguments against the claims.
      ie

      ‘As with all prominent critics of Osborne (Krugman, S W-L) you want to
      have your cake and eat it. So the flat period was down to Osborne, the
      growth down to exogenous factors. You want credit for predicting that a
      tightening of fiscal policy leads to lower growth (which nobody but the
      lunatic fringe denies) but no blame for failing to predict the recovery.’

  • Tom Tom

    I would like Osborne to explain this Monetary Transmission Mechanism in detail so academic circles can discover new insight. It is believed to function differently in the UK from the US or so the Fed hopes. I am fascinated by his assessment of Velocity and why he thinks it will behave as he wants. I am veryb interested in why britain could never use Monetary Base Control when Thatcher engaged in her Monetarist Phase but Osborne thinks it is working just fine at present.

    This economic miracle whipped up for the year of elections is one for the textbooks with Consumption increasing, Investment falling, Government running huge deficits, and an External Sector in historic levels of deficit. This makes for an interesting funding issue after May 2015.

    Of course with China and Russia and BRICS moving away from a petrodollar standard it makes one wonder what the backwash will be in Merrie Olde Englande when the world takes a lurch towards a global crash or war

  • dado_trunking

    Inflation (including house prices) unequals growth.
    Debt fuelled consumption unequals production.
    Education is no longer free.

    It shows . . .

    • Robert_Eve

      Why should education be free?

      • dado_trunking

        Societies which can afford to fund it by general taxation will give you the answer.

        • the viceroy’s gin

          If it’s “free” then it doesn’t have to be funded, you socialist nutter.

    • starfish

      Education has never been free

      • HookesLaw

        A lack of education, as evidenced by Mr Dado, is endemic in some quarters.

        • the viceroy’s gin

          …the socialist quarters particularly, like you and that guy inhabit.

      • dado_trunking

        Correct, I recall people receiving grants to escape their dismal surroundings. Perhaps standards are now so high we no longer need to educate those who, how shall I put it, know a freebie whenever they see one. That could be a flatscreen in a broken shop window or a Parliamentary second home allowance claimed for a place which both your parents and kids inhabit.

        If you allow, I will make no distinctions between the two for now.

        • the viceroy’s gin

          You’ll make no distinction anyway. That’s how you socialist nutters work.

  • kyalami

    The real recovery will come when debt starts going DOWN.

    • Shinsei1967

      You talk the barmy economics of Fraser Nelson. So you don’t think that GDP growing at 4% with low inflation and real wages rising wouldn’t count as a recovery if debts weren’t coming down ?

      The point about debt is affordability not nominal levels.

      • saffrin

        The point about debt is it has to be paid back……..with interest.

      • kyalami

        Oh, growing GDP etc are all important.

        However, one cannot ignore the sheer size of the debt or you end up like the PIIGS. Already we pay over £70bn in interest on our accumulated debt. That is more than the total budget of most government departments.

        • Shinsei1967

          It’s forecast to be £68bn by 2017-18. Currently “only” about £50bn.

          Clearly would be better to have no debt interest payments but the point is whether “we” get a larger return on the assets our debt funds than the cost of that debt.

          Pretty much every company in the UK borrows at (say) 5% to invest in a business that returns (say) 10%.

          • kyalami

            Ah, you are right on the size of the interest bill: £53bn. Still bigger than most government departments.

            Companies may borrow to invest. That’s what companies are about. Governments should keep well clear: they have a very poor record in this area.

            • Shinsei1967

              But you get an economic return from government spending. We wouldn’t have a GDP of £1.5trn if we had no schools or hospitals. That’s as much an investment in people as Vodafone paying for its fast track graduates to do an MBA.

              It’s clearly more difficult to measure but it does exist.

              • Count Dooku

                Schools and hospitals can be private. I see no reason why govt’s should have effective monopolies in these areas. Even if you want to argue that education and health should be publicly funded, it doesn’t mean that service provision should be run by the government.
                And how do you propose we measure the IRR of the health and education budgets?

  • Des Demona

    Recovery? A little premature to gloat to the IMF.
    GDP still below pre-recession? Slowest recovery for 100 years. Falling living standards.Increased borrowing and a recovery based on consumer spending rather than production and export. Record levels of household debt. Productivity 20% below the G7 average. Investment as a percentage of GDP ranking us 159th in the world (just behind Paraguay and Mali)
    No, perhaps a little early for crowing. His words may well come back to haunt him.

    • DWWolds

      And under Labour we had the deepest recession for 100 years. Thus, there was never likely to be a quick and easy recovery. Also, the reason we are still borrowing so much is that we have not yet managed to reduce the deficit left behind by Labour sufficiently. In case you haven’t worked it out the amount by which we overspend each year adds to the debt. The other points in your post can also be answered but I haven’t the time just now!

      • Des Demona

        I don’t think you’re suggesting Labour caused the world wide recession so I won’t comment on that.
        As Larry Summers pointed out, the deeper the recession the quicker the recovery should have been. The US is over 5% above pre recession levels, while we are still below.
        Immediately prior to the financial crisis the deficit to GDP ratio was below that inherited from the Tories.
        The coalition have borrowed more in 4 years than labour did in 13, including in the height of the financial crisis.
        I look forward to your other points when time allows.

        • wycombewanderer

          “Ben Bernanke said that Mr Brown’s decision to strip the Bank of England of its
          supervisory role over banks had led to a “destructive run” and a “major
          problem for the British economy”.

          The comments, made to the US Senate, are embarrassing for Mr Brown who has
          repeatedly refused to concede that his decisions as Chancellor may have
          contributed to Britain’s current economic problems.

          The Federal Reserve chairman’s comments came after an official audit
          calculated that British taxpayers now face an £850 billion liability as a
          result of Government action to bail out the banks.”

          He made it worse than it need have been and that was without his reckless spending during a time of growth.

          Mr Bernanke, regarded as the most powerful banker in the world, said: “Over
          the past few years the government of Britain removed from the Bank of
          England most of its supervisory authorities.

          “When the crisis hit – for example when the Northern Rock bank came under
          stress – the Bank of England was completely in the dark and unable to deal
          effectively with what turned out to be a destructive run and a major problem
          for the British economy.”

          • Des Demona

            yeah but you kinda missed this bit out of the same unattributed article (I found it though)

            ”The Treasury last night hit back at the remarks which threaten to spark a diplomatic row between Britain and America.

            A spokesman said: “The Bank of England, Treasury and Financial Services Authority took action to protect deposits in Northern Rock and the Bank had the power and used it effectively to provide emergency support to Northern Rock to keep its doors open. The Bank did deal with the situation effectively.”

            Treasury sources also added that the context of Mr Bernanke’s remarks was that he was lobbying to retain his own powers as a central banker.”

          • Tom Tom

            Quoting Ben Bernanke is barely credible, slightly more than Brown but not serious. Bernanke has created the Brown Problem Cubed

            • wycombewanderer

              He’s more credible than Polly Toynbee or telemachus though!

              • HookesLaw

                And tom tom

                • Tom Tom

                  You know Hookie, I know much more about this area than yourself. Because we post using silly names you have no idea who you are trying to insult. Soon i will cease to post here as I move on and cease to waste time with opinionated idiots like yourself. Facts, as Huxley stated, do not cease to exist because they are ignored

        • HookesLaw

          The coalition inherited a deficit of 160 billion and an economy incapable of meeting its spending levels. labours policy as spouted by Balls was to borrow MORE.

          You are a blind fool.

          • southerner

            You seem a bit more chipper today now that you think the attention has moved on from Europe and Maria Miller. How is she by the way?

            • Count Dooku

              HL is sound when he’s attacking Labour. Not so much when he’s on the defence on Tory policy.

              • southerner

                He is part of the socialist Camerluvvy set so not “sound” under any circumstances

                • Count Dooku

                  I am not so sure. He and I are of a like mind when it comes to the loathing of the Labour Party.
                  The difference is that he can find no fault in the Conservative party.

                • HookesLaw

                  I can find fault if I want. Any great political party is a coalition and its inevitable that there will be differences within it. But what I want in truth is to protect us from another Labour government. Don’t you?

                • the viceroy’s gin

                  …you best not split the UKIP vote then, lad.

                  Because in 13.0 months time, your boy Dave is going to have his head mounted on a spike.

                • Count Dooku

                  Oh I’m going to be voting Tory next election, that’s guaranteed. But I’d like to see an example of when you’ve been critical of the party.
                  I’ve been reading Coffee House for a while now and I can’t recall you ever having an opposing view, even on very un-Tory policies like H2B or the universal “free” school meals.

                • HookesLaw

                  Ah – socialist cammerluvvie….
                  What a joke. You spout rubbish because you need to live in a secure fantasy world.
                  You bare a thick oaf.

              • HookesLaw

                Whats wrong with tory policy?
                Education
                Welfare
                Pensions
                Health
                Public sector jobs.
                Employment
                All are sound. And this is a coalition. If people had voted tory instead of UKIP we would have had even more tory policies.

                • the viceroy’s gin

                  …you mean, even more socialism, don’t you, lad?

            • HookesLaw

              As her stalker – Mr Nelson.

          • the viceroy’s gin

            False. Your Camerluvvie heroes photocopied Darling’s budget, and then increased it, when the beatified IMF demanded of them to spend more.

            • HookesLaw

              No they did not photo copy Darlings budget Mr Brainless.
              They cut hundreds of thousands of public sector jobs. They in fact had a June budget which made various cuts. Labour in fact complained about them.
              There are a lot of blind fools about.

              • the viceroy’s gin

                Yes, the socialist Camerluvvies photocopied Darling’s budget, except thanks to their blind allegiance to the socialist IMF, they actually increased spending from Darling’s budget, meaning they spent more than Lab.

                But that’s what we’d expect from you socialists. You spend and borrow. It’s what you do.

        • Colonel Mustard

          “The coalition have borrowed more in 4 years than labour did in 13, including in the height of the financial crisis.”

          And yet your comrades are always complaining about “cuts”. Please reconcile all this government borrowing and all these “cuts” for me.

          • Des Demona

            Surely that’s the job of you Tory boys, not mine. I’m just stating the facts.

            • kyalami

              No it isn’t. You made the claim. You support it.

              • Des Demona

                I didn’t make a claim, I stated a fact. The coalition has borrowed more in 4 years than the Labour did in 13. Fact.
                It is then up to me to explain why Tories still go on about alleged Labour profligate borrowing because…..?

                • Colonel Mustard

                  No it is up to you to explain why you and your comrades are then complaining about cuts.

                  PS I don’t think the Tories go on about profligate borrowing by Labour but rather their profligate spending habits and failure to create a surplus when there was plenty of money. Also the fact that they urged more borrowing following the recession. I think one of Mr Balls’ early urgings out of government was for the government to spend its way out of recession, presumably by borrowing even more since Mr Byrne noted “The money is all gone”?

                • southerner

                  Labour always spend all the money. However Osborne’s claims are entirely over-inflated. He has ducked all the big issues as well but he is a member of the un-conservatives, itself part of the liblabcon, so we should expect nothing less.

                • Colonel Mustard

                  I’m not really interested in Osborne’s claims but in Labour’s position and attack. I want to be persuaded not have my prejudices reinforced!

                • Mynydd

                  Are you not interested in Mr Cameron/Osborne’s claim to be the party of low taxation yet the first thing they do is up VAT up for Labours 17.5% to 20%

                • Colonel Mustard

                  No, I’m not. And stop stalking me and using my comments as a vehicle to peddle your low-grade party political propaganda.

                • HookesLaw

                  No he isn’t. He has trod a difficult path made more difficult by the Eurozone crisis and has preserved jobs and the economy and sustained society through a difficult time and we have returned to growth.
                  He has not thrown the baby out with the bathwater. And during this period hundreds of thousands of public sector jobs have been eliminated and record numbers of people are in work.

                • the viceroy’s gin

                  He’s a Darling clone, to the jot and tittle and LibLabCon whimsy.

                  And he’s today worshipping at the altar of the socialist IMF, like all you socialists.

                • Des Demona

                  ”No it is up to you to explain why you and your comrades are then complaining about cuts.”
                  Ummmm….. because there are cuts?
                  Are you saying there haven’t been? Or are you saying that because the government are borrowing more there can’t have been?

                • Colonel Mustard

                  No, I’m asking you to reconcile increased borrowing with cuts. Stop trying to twist my request into a statement of attack against the government. I’m not saying anything except requesting an explanation from you of why the Labour party complain both of increased borrowing AND cuts.

                  If we accept the existence of this Catch 22 what is the solution? What would Labour do?

                • Des Demona

                  I have done that above.
                  I don’t know what Labour would do. I know what I would do. Embark on building large scale affordable housing and introduce a living wage.
                  The infrastructure investment would have the benefits of increasing employment, thus increasing taxation and reducing welfare, provide affordable housing which stops housing bubbles and again reduces welfare payments as HB dramatically decreases rather than inflated payments going into the pockets of private landlords. And provides a long term asset base.
                  The living wage would massively decrease benefits like tax credits as companies have to pay a decent wage rather than getting huge subsidies from the taxpayer to increase their profits which get sucked up to the shareholders.

                • Colonel Mustard

                  “Embark on building large scale affordable housing and introduce a living wage.”

                  And where would the money to do this come from if not from increased borrowing? It is curious that when discussing what they would do Labour advocates always talk of ‘investment’, suggesting no problem in the supply of money.

                • Des Demona

                  There is a major difference between borrowing for growth and borrowing to stand still.
                  In very simple terms –
                  You have a job that pays 20k a year but your bills are 21k a year. You have to borrow 1k a year to stand still.
                  There is a job that pays 30k a year but you need a 1k season ticket to get there.
                  You borrow the 1k but this time instead of standing still it leads to ”growth”

                • Colonel Mustard

                  Those simple terms don’t really work for the government budget. How does a government “borrow for growth” when it has a budgetary responsibility to “stand still” and is borrowing to do so? The provision of services does not stimulate growth but has to be paid for. Hence the borrowing and hence the cuts.

                  I think this goes to the heart of Labour’s belief that the state should do everything and to the inconsistency of their arguments. The very fact that you deploy such a simplistic argument demonstrates a key lack of appreciation for the scaled up complexity of the economy and their inter-dependencies, leaving aside the uncertainties of the theories being peddled. For the government there is no certainty of that 30k job for the 1k investment. A better analogy would be “investing” 1K in gambling because returns are not guaranteed.

                  Who knows, if Labour had supported the Coalition’s policies in the national interest rather than opposing them at every opportunity and talking down the recovery maybe we would be in a better position now. Maybe the positive feeling of a Parliament united and Labour admitting its mistakes would have stimulated growth?

                • Des Demona

                  The fact that I deployed a simplistic argument was due to the fact that you were being wilfully or otherwise ignorant of the concept of borrowing for growth.

                • Colonel Mustard

                  Please see Count Dooku’s comment above.

                  Oh, I understand the concept of borrowing for growth as it applies to the private sector and the principle of borrowing to invest in a growing business but I find it harder to understand how that can be applied to the provision of government services in exchange for taxes. What is the business or product to be “grown”?

                • Des Demona

                  Mmmmm.
                  Strange – you say my simple explanation of borrowing for growth does not apply to Government but seem to think that private investment in a business somehow does?
                  In most cases the product to be grown is GDP and the health of the economy by way of increased tax revenue, savings and spending power amongst other things.
                  According to the coalition HS2 investment will return £2 for every £1 spent. You can believe that individual case or not, but that’s there theory not mine.

                • Colonel Mustard

                  “you say my simple explanation of borrowing for growth does not apply to Government ”

                  No, I did not. I said I find it harder to understand and asked you to explain it. Does government “grow” GDP?

                  If you believe that the health of an economy is determined by increased tax, savings and spending power that might explain the legacy of 1997-2010 although the savings bit seems to have been overlooked.

                  Cherry picking HS2 is not really helpful. I could cherry pick Brown’s sale of gold reserves at market bottom prices set against what happened next. In fact if I were to consider Labour party economic theory in terms of that act alone a healthy dose of scepticism might not be misplaced.

                • Des Demona

                  Really? I did say amongst others, but your definition of the health of an economy is?
                  Ah so I’m cherry picking. So HS2 is not representative of infrastructure or other Government spending that promotes growth, and I just sought that little orphan out.
                  Yeah ok.

                • Colonel Mustard

                  I don’t have a definition. I presumed you did because you seemed so certain of all the answers which is why I asked you.

                  I didn’t say HS2 is not representative of anything. I said it was not helpful. But I’m struggling to see exactly how it promotes growth anyway. If I go and spend money in Waitrose then presumably I’m promoting their growth but I’m still faced with the reality of whether I can afford to or not. Since it is not government but private companies that are going to build and operate HS2 I’m struggling to see government’s role (they sold off the railways a long time ago so I’m puzzled why they should suddenly feel the need go back into the railway business – but of course there was a European Directive). Unless it is like Brown and PFI which means the government cooperates with the corporate world to improve the infrastructure but leaves the operators of it saddled with future debt?

                • Des Demona

                  I gave you my definition, you don’t like it. That’s your prerogative.
                  No you said HS2 was ”cherry picked” Why pray tell is the HS2 example not helpful? It’s quite simple really. But here’s another general example.
                  Government funds a development agency to create an enterprise park and provides tax breaks for incoming companies like Toyota for example.
                  Toyota hire 6000 employees. Employees get paid, government gets tax, employees spend wages thus creating more jobs in the local economy and elsewhere . More people are employed, they spend their wages, they create more jobs ……etc.
                  The original Government investment is repaid many times over.
                  It’s not that hard.

                • Colonel Mustard

                  Very good. I understand the theory but the bit I’m having problems with is ‘funding’. Where does this funding come from for the initial outlay and tax breaks?

                  Can you give an example of where this has actually been done and quantify the net benefit to government?

                • Count Dooku

                  As far as I know HS2 wont be funded by PFI. The vast majority of it will come from general taxation with a small proportion of co-funding coming from the private sector.

                • Des Demona

                  You do like the ”reductionist” tactic don’t you.
                  Funding comes from taxation or borrowing obviously.That’s what Governments do.

                  2 second search of the internet.

                  https://www.adsgroup.org.uk/articles/22423

                • Colonel Mustard

                  Ah so the money has to be borrowed or obtained by taxation which in the current situation would mean increased borrowing and higher taxation. Isn’t there an alternative economic theory that both those depress rather than stimulate growth?

                • Des Demona

                  You seem to believe that borrowing by a Government is necessarily a bad thing. Yet you have no objection to a private company borrowing for investment?
                  Straw man argument again. A different strategy of borrowing for growth would be to have lower borrowings than is the case now and nowhere did I say an increase in taxation
                  The entire capitalist system is based on borrowing, be it from financial institutions, shareholders or Government.
                  There are no doubt alternative economic theories for just about anything. In the real world you would prefer the one which you felt gave the best socio/economical potential.

                • Colonel Mustard

                  I am ambivalent about government borrowing but doubtful it can stimulate growth in the private sector. You on the other hand implied by your very first comment that current government borrowing is bad but previous Labour government borrowing was good. I wanted to explore that and you helpfully reinforced the implied dogma with actual dogma.

                  Finally you admitted that your position comes down simply to a preference for one unproven economic theory over another.

                  Essentially, as far as I can determine it, the position of the Labour party and its advocates is that anything they do is good and anything the Tories do is bad.

                • the viceroy’s gin

                  You’re using a defense industry report to document that defense industry spending will grow the economy? Are you trying to be satirical, or what?

                  And you didn’t do what was asked, which is to document the net to government that you claimed would occur. Everybody knows that if you borrow and spend, you can “create jobs”. You will also eventually go bankrupt, unless it pays to borrow and spend.

                • HookesLaw

                  HS2 is an infrastructure project spread over nearly 2 decades. Even if you do not agree with it – it is the type of long term project any nation needs.
                  It has no relevance to cutting a structural deficit in the short term. Its and similar projects’ effects are long term.
                  As I say Des is an idiot.

                • the viceroy’s gin

                  All you socialists are idiots.

                  And all you socialist idiots love the EUSSR’s handmaiden rail projects.

                • Count Dooku

                  The things that the government does that generates financial returns without subsidy can be written on the back of a cig packet.
                  The infrastructure budget is tiny anyway. It should have been protected (and the NHS cut) but the impact on a £1.5 Trillion economy is negligible.

                • HookesLaw

                  The NHS is going through a 20 billion efficiency drive.
                  Why do you want to cut NHS spending – ? Are you and your family immune from illness and injury and pregnency?

                • the viceroy’s gin

                  Yes, you socialists can always be counted on to blindly support your socialist dreamboat… the NHS.

                • Count Dooku

                  There is no efficiency if spending is going up. And I don’t see what cutting the health budget has to do with my family. The Home Office budget has been shrunk massively but the crime rate has gone down.

                • Count Dooku

                  Very well put. The government does not grow the economy. All the money it taxes and borrows comes from the private sector. The Keynesian multiplier is an extremely dubious theory that has been found to work no where in the world. If it did Japan would be the fastest growing economy on the planet.

                • Mynydd

                  Like all wages a living wage would be paid for by employers. Not all borrowing is wrong. Like many I borrowed by taking out a mortgage to buy my first house, I consider that a good investment as it saved money in the long run.

                • Colonel Mustard

                  Go away.

                • HookesLaw

                  Employers who would thus pay less tax and who would stand a chance of going bust. There is no such thing as free money.

                • the viceroy’s gin

                  Yes, there is no such thing as free money, which you socialist Camerluvvies might have remembered, when you dolts jacked taxes first thing after you skulked into coalition.

                • Mynydd

                  The Labour party is not complaining, just stating the fact, there has been increased borrowing and cuts. The simple fact is, the cuts in spending implemented by the government have not reduced borrowing. If you cannot see this then you are beyond help.

                • Colonel Mustard

                  “The Labour party is not complaining”

                  Tell that to the marines. The Labour party and its advocates are always complaining, always attacking anyone who does not conform to their view of the world. One only has to review your comments on this website to understand that. Collectively you are like that Harry Enfield character whose catchphrase was “You don’t want to do it like that, you want to do it like this”. On and on and on.

                • the viceroy’s gin

                  If the borrowing hasn’t been reduced then there were no cuts.

                  Which is to be expected, because the Camerloons photocopied Darling’s budget.

                • kyalami

                  No … the left wing simultaneously claim the deficit is too high and cuts are too savage. Confused, as ever.

                • Des Demona

                  What’s confusing about that? If borrowing had been for growth rather than standing still then the deficit would be lower and the cuts not so savage.
                  Osborne finally realised this with help to buy. But due to incompetence it was the wrong ”growth” policy at the wrong time because due to the housing shortage all it did was create a housing bubble.

                • Colonel Mustard

                  “If borrowing had been for growth rather than standing still then the deficit would be lower and the cuts not so savage.”

                  How so, since it didn’t actually happen? How can you be sure? What are you basing this presumption on?

                • Des Demona

                  Common sense.
                  Borrowing has increased because of lack of growth exacerbated by cuts in spending.
                  Cuts in spending not so big, investment in growth continues and provides growth, requirement for borrowing diminishes.

                • Colonel Mustard

                  That all sounds so wonderfully simple. So you are trying to tell me that no-one in government, or the Treasury or the Bank of England has any common sense?

                  To be honest I think that your connection between public sector spending cuts and lack of growth in the private sector is tenuous to say the least but then I am not an economic expert. Would I be correct in thinking that you probably work in the public sector or subsidised third sector?

                • Des Demona

                  You might find a lot of takers for that proposition but that’s not what I’m saying. The situation is complicated by politics.
                  You would be very far off the mark with that assumption of my work sector.

                • Colonel Mustard

                  Ah, yes, I understand. The people in those organisations would only be able to show common sense under the enlightened governance of the Labour party who are always right about everything, never wrong and whenever things do go wrong it is always someone else’s fault, usually the Tories, often Mrs Thatcher.

                • Des Demona

                  Ohhhhh you disappoint me. Throughout this thread and elsewhere you have been calling me comrade, alluding to ”my” Labour party, been told I peddle party political dogma etc. It seems to be your excuse for dismissing my points out of hand.
                  For the record, I’d say Labour were the least worst available option as far as I’m concerned and that’s my political standing. But if you want to get all party political about it then that is of course your prerogative.

                • Colonel Mustard

                  I don’t think I have been dismissing your points out of hand but your advocacy of the Labour party as the font of all wisdom and righteousness is rather obvious from your comments here and elsewhere. And it was you who first used the expression “Tory-boy” to apply to me!

                  I would have to disagree with your suggestion that Labour were the least worst option and nothing you have written here persuades me otherwise.

                • Des Demona

                  Was that before or after I’d been called a socialist idiot and a blind fool? And in reality my exact words were ”Surely that’s the job of you Tory boys, not mine. I’m just stating the facts.”
                  -which given the level of abuse I was getting was fairly mild?

                  I have not been advocating the Labour party as the font of all wisdom and righteousness, I think that hyperbole is perhaps indicative of what you want to hear so don’t have to address the points in any meaningful way.. The fact that I do not like several of the current Government’s policies and put forward suggestions of my own hardly makes me an ardent supporter of Labour, indeed very recently on these boards I described them as treacherous on one policy in particular.
                  I have no intention of trying to persuade you of anything. I’m putting a different point of view across. You may not like it. Fine.

                • Colonel Mustard

                  I don’t think I called you a “socialist idiot” or a “blind fool”. That was Hooky who calls everyone names if they don’t agree with him.

                  I cannot address the points in any meaningful way because they are replies to my questions that do not answer them. It’s not a question of disliking your point of view but a question of understanding the evidence that is the imperative for it. So far it just appears to be a belief.

                • HookesLaw

                  Nutjobs deserve to be called names. I do not recall what or if I said…
                  But for the record Des is a socialist idiot and a blind fool. There is no shame is pointing out that fact.

                • the viceroy’s gin

                  Exactly. You socialist idiots are blind fools, and we conservatives should have no qualms pointing that out to you dolts.

                • HookesLaw

                  Rubbish. Labour were borrowing more even when we had growth. Growth was not paying for spending, revenues were not covering spending.
                  Without cuts then growth would not mystically eliminate the deficit. You are saying that borrowing MORE would somehow cut the deficit when historically it did no such thing. The notion that borrowing more to spend would generate revenues from that borrowing to not only repay the borrowing but cut further the deficit is pathetic. Your implication is that borrowing an extra 50 billion would generate revenues of 50 billion plus another chunk to actually cut the deficit. Laughable! Why did Labour’s extra borrowing in 2002 – 2008 not produce this miracle?

                  Because banks were having to recapitalise because of the crash and the new international borrowing rules it became difficult for them to meet mortgage demand.
                  So for a fee the govt are assisting.

                • the viceroy’s gin

                  So basically, you’re saying borrowing more is bad, yet you socialist Camerluvvies want to blow the budget and balloon the debt with HS2.

                  You socialists are nuts. You are absolutely nuts.

            • Colonel Mustard

              No. The proposition seems to originate from Labour. That the government is borrowing more but inflicting “cuts” (although it never seems to be deployed in those terms but rather only one or the other to suit the particular attack). I just want to understand those dynamics please.

              • Des Demona

                The major reason is that due to Osborne’s ideological welding to the philosophy of austerity, the recession has been exacerbated resulting in more borrowing because of the lack of growth.
                Okay?

                • Colonel Mustard

                  Eh? Isn’t that another contradiction? If you “ideologically weld to the philosophy of austerity” (whatever that means) you presumably spend less and therefore have to borrow less. But you are saying the government has borrowed more. If that is forced upon them because of lack of growth where does this growth come from? By spending more and thus borrowing more?

                  As I understand it most of the austerity features in government spending on its public services and I’m not sure how those services contribute to economic growth?

                  The contradiction seems to be alive and well.

                • Des Demona

                  Well no, it is your straw man argument that ”if the government is borrowing more then how can there be cuts” that creates the contradiction.
                  The ”austerity” philosophy has no real economic basis, it is an ideological concept to ”shrink” the state and cut spending.(including infrastructure and government contracts)
                  The problem being that it stunts growth which then requires increased borrowing. Yeah?

                • Colonel Mustard

                  Well no. It is not a strawman. I haven’t created the argument of austerity and cuts. It is your side that deploys that argument. You complain of austerity and cuts. How does “austerity” in the public sector stunt growth in the private sector which then requires increased borrowing in the public sector? How does “shrinking” the state stunt growth?

                  Even from the leftist-dominated Wiki these matters are the subject of competing theories and controversy, not settled science. Therefore it seems more logical to present an argument as opinion rather than certainty. In that context your “statement of facts” becomes meaningless. Merely an attempt to discredit the government rather than to argue an cogent alternative.

                  And when the great estates in Britain found themselves unable to meet the cost of maintenance in the 1920s and 30s they didn’t try to increase those costs in order to stimulate “growth”.

                • Des Demona

                  oh dear. Okay.
                  A 42% slashing of the infrastructure budget, most of which went to the private sector is just one example of cuts which stunt growth in the private sector.
                  I’m not going to go through the Red Book line by line.

                • Colonel Mustard

                  Ok – “A 42% slashing of the infrastructure budget, most of which went to the private sector is just one example of cuts which stunt growth in the private sector.”

                  So if the 42% was not “slashed” but instead maintained government borrowing would have been even higher by a factor of 42% and the maintained infrastructure would stimulate growth how exactly?

                  It sounds like you are deploying economic theory as certainty with the great luxury of not having any responsibility for the potential consequences.

                • Des Demona

                  ”It sounds like you are deploying economic theory as certainty with the great luxury of not having any responsibility for the potential consequences.”
                  And what would you like me to do? Come up with an answer which has nothing to do with economic theory and take responsibility for the consequences?
                  Purleeeze.

                • Colonel Mustard

                  No, I’d like you to be less unequivocal in your attacks on the government for their economic policy, accepting the limitations of theories and that you could just be wrong. Which makes your original “statement of facts” irrelevant.

                • Des Demona

                  Huh? Are you for real?.
                  Who made you boss of the world?

                • Colonel Mustard

                  ‘I’d like’ is an expression of desire and preference not a demand. I would like that but you are under no compulsion to provide it.

                  I requested an explanation. You have not provided one. All you have done is to peddle party political dogma as gospel. You have been found wanting, like your party.

                • Des Demona

                  You requested an explanation as to why if the government are borrowing there are still cuts. I provided it as any reasonable person can see.
                  The one peddling dogma as gospel is in fact you. You have come up with no facts or explanations, simply stating your own rather un-evidenced opinions and requesting that I stop attacking the government with ”economics”.
                  Ludicrous.

                • Colonel Mustard

                  I haven’t expressed any opinions, only questions which you have failed to answer adequately. And, as is usual with lefties, you finally resort to the ad hominem. At least you are consistent.

                • Des Demona

                  ”All you have done is to peddle party political dogma as gospel. You have been found wanting, like your party.”
                  Opinion yes or no?
                  Please show my ad hominem attack – despite me being called a leftist idiot, a blind fool etc by people whom I can but only suppose are not ”lefties”

                • Colonel Mustard

                  No, it is a statement of fact. You stated that the government had borrowed more than Labour but then failed to reconcile that fact with Labour’s attacks against cuts when asked to do so. Each response from you asserted a partisan belief in Labour’s position (based on theory) with little or no evidence for it other than that belief. That is dogma.

                  I never requested you to stop attacking the government with “economics”, I requested you to stop attacking them by (thinly) asserting that a theory of economics is gospel. You described my comments as ‘ludicrous’ when I was merely pressing you to explain the apparent contradiction in Labour’s position.

                  ‘Ludicrous’ – means so foolish, unreasonable, or out of place as to be amusing. I do not think my request for clarification of Labour’s position was either foolish or unreasonable.

                • Des Demona

                  Dear me you are really struggling now. Your opinions are now facts and my facts are now opinions?

                  ”You stated that the government had borrowed more than Labour but then failed to reconcile that fact with Labour’s attacks against cuts”

                  I was never asked that question, even if it is one at all. I was asked

                  Please reconcile all this government borrowing and all these “cuts” for me.”

                  It’s a rather vague question to say the least but I explained how there was borrowing and cuts.
                  Did you know that much of the world is run on economic theory, including the government’s policies? I haven’t presented any economic theory as gospel I have applied common sense against ideological dogma.

                • Colonel Mustard

                  No I am not struggling at all, merely slightly bemused by your “answers” and assertions.

                  “Your opinions are now facts and my facts are now opinions?”

                  I don’t believe I suggested that. My opinions have always been opinions. The two “different” questions you cite of me are, in fact exactly similar. The relationship or reconciliation of increased borrowing with cuts. You have attempted to answer, heroically, but I remain, sadly, dubious.

                  I’m not sure how, in the context of competing unproven theories, one unproven theory can be touted as common sense. But still, your final paragraph is a fine concession that nothing is certain and that the government’s application of unproven theories is no better or worse than Labour’s proposed application of unproven theories. Thank you for that.

                • Des Demona

                  ”All you have done is to peddle party political dogma as gospel. You have been found wanting, like your party.”
                  Opinion yes or no?

                  ”No, it is a statement of fact.”

                  “Your opinions are now facts and my facts are now opinions?”
                  I don’t believe I suggested that. My opinions have always been opinions.”

                  Make your mind up!

                • Colonel Mustard

                  I see no conflict there. Not all my statements are opinions but those which are opinions have always been opinions.

                • Des Demona

                  Except when no matter how subjective or un-evidenced they are, they are in fact facts? Yeah, keep tap dancing lol

                • Colonel Mustard

                  This is the fact I stated:-

                  “All you have done is to peddle party political dogma as gospel.”

                  Have you not been doing that then? Where does your opinion part from Labour party doctrine and where have you admitted that you could be wrong in promoting one economic theory over another?

                  Most of the remainder were observations and questions.

                • HookesLaw

                  Its a facile line to say ‘the govt have borrowed more than labour’ when the govt inherited a 160 billion deficit to start with.
                  The very first year that the govt were in power 2010-2011 was in fact Labour’s deficit anyway, they gave the 2010 budget.
                  2007-08 37 billion
                  2008-09 98 billion
                  2009-10 160 billion
                  2010-11 141 billion
                  This is a total of… 426 billion
                  Since then
                  2011-12 119 billion
                  2012 -13 117 billion
                  2013-14 95 billion
                  So its clearly wrong to say the govt have borrowed more in the first 3 years its responsible for than the last 3 years Labour cocked up

                • telemachus

                  I’d like
                  A Pinochet expression of desire

                • Colonel Mustard

                  I’d like less stalking.

                • Tom Tom

                  Nothing wrong with maintaining infrastructure – I would like roads without potholes and without 40-foot artics trying to use cowpaths and congesting streets. I would like to see bridges repaired and proper roads……Britain has fewer miles of road per 1000 cars than most EU countries.

                  I don’t mind employing private companies to maintain infrastructure, but I doubt anyone wants to invest in Britain knowing how difficult it is to move around a congested island run like an Industrial Museum

                • HookesLaw

                  You would like that would you – but then howl about HS2?

                • the viceroy’s gin

                  …I’d say you’re the only howler hereabouts, laddie.

                • HookesLaw

                  Somehow Labour were going to cut the deficit? How? We had growth before the recession and they ran ever bigger deficits then. So how was growth going to cut the deficit?
                  Cutting spending is the only way to cut a deficit where spending is not covered by revenues.
                  And remember we had an economy contracted by 7% and a chunk of the previous economy – the financial sector – eviscerated and not likely to return to previous revenues.

                • the viceroy’s gin

                  If “Cutting spending is the only way to cut a deficit”, then why did you Camerluvvies photocopy Darling’s budget, and why are you increasing spending?

                  And why are you socialists always lying hypocrites?

                • the viceroy’s gin

                  …if the Cameroons’ ideology is to “shrink” the state and cut spending, it’s failed spectacularly, either that or you’re completely off base on everything you’re preaching.

                • southerner

                  So much for the bonfire of the quangoes eh?

                • Damon

                  The “lack of growth”? Hilarious. Other countries in the G7 would give their eye teeth to have our GDP growth. As for George, talk about a rock and a hard place. If he had exceeded his (essentially modest) austerity agenda, he would have been eviscerated for lacking compassion, being “ideologically driven”, etc, etc. As it is, he’s now criticized by Kippers for not cutting enough.

                  The French and Spanish would be delighted to have our “problems”.

          • Tom Tom

            Really easy. You confuse Current Spending with Funding. The
            Government is funding the Banks buy issuing low coupon Gilts and TBs and
            buying back older Gilts at higher prices so the Banks get extra CASH.

            This
            is how the public finances are funding Banks…..you know you buy a new
            car at 0% finance and swap it with your daughter so you take on her
            older car with 10% finance and that way you give her a Cash boost

            • HookesLaw

              You know something? I think you do not have a blind clue what you are talking about.

          • Mynydd

            The main element, above all else, in Mr Cameron/Osborne’s 2010 economic plan was to clear the deficit by 2015. In 2011, 2012 and 2013 they failed to meet their target, this as resulted in the government borrowing more than the projected borrowing in the 2010 plan. Thus the difference between the 2010 projected borrowing and the actual borrowing, is down to the government’s incompetence and failure to follow its own 2010 economic plan.

            Mr Cameron/Osborne’s latest long term economic plan is to clear the deficit by 2020. In order to achieve this they are committed to £16bn worth of further unspecified cuts, of course this is after the next general election.

            And yet your comrades are always complaining about “cuts”. By this do you mean the cut in income tax from 50% to 45% for those earning over £150,000.

            • Colonel Mustard

              I’m not interested in what you have to say about this or anything else, thanks. It can be relied upon to be complete bollocks.

            • HookesLaw

              Wrong. The Tories claimed to want to eliminate the Structural Deficit, not the cyclical one.
              The crisis in the Eurozone amongst other things put that plan back.
              Wisely Osborne did not make crazy additional cuts simply to meet a target which events had rendered obsolete.

              • the viceroy’s gin

                …”additional cuts”, lad?

                Your socialist Camerluvvie heroes have made no cuts. They have increased spending and the debt is still skyrocketing.

              • southerner

                Utter nonsense. Osborne ducked all the serious decisions and failed the risible tests he set himself. The crisis in the Eurozone of course didn’t exist when he set the tests ho ho.

        • DWWolds

          But we were at a different point in the economic cycle just before the crash than when the Conservatives left office. Thus, the deficit should have been lower in 2007 than it was in 1997.

          As for the borrowing, at the end of the financial year 2009/10 the deficit – and thus borrowing – left behind by Labour added £160bn to the debt. It is the concept of accruals. Work those through for the four years since the last election and you will be able to see where a good chunk of the extra borrowing has come from – and that is despite the efforts of the Coalition to cut the deficit.

          • HookesLaw

            Yes
            From 2002 at least Labour were spending money they were not raising in taxes. This at a time when we should have been running surpluses.

        • 2trueblue

          Cutting back on the massive growth that Liebore presided over in the public sector cost a substantial amount because of the contracts those employed had gifted to them. One interesting item in the public sector that is rarely mentioned is the length of holiday that those employed in the public sector enjoy. Each year adds another day to your holiday. Fantastic. The private sector could not afford someone to be away for 7 weeks plus.
          I once tried to head hunt out of the public sector and some there enjoyed 10 weeks holiday, and proudly told me he most certainly took it all. They also have the extraordinary benefit that the longer you are employed in the same job you get an automatic rise. Not so in the private sector.

    • HookesLaw

      Labour shattered the economy and shattered the banking system we rely on to aid economic recoverty.
      Stop moaning about ‘productivity’ – if our productivity was higher then you would be moaning about unemployment. Significantly the govt has avoided the levels of unemployment that the recession would have suggested.
      You are a socialist idiot who has no arguments just propaganda.

      • Tom Tom

        Labour did NOT shatter the banking system. It destroyed itself through
        FRAUD and GREED. Labour had NO effect on the Banking System, it simply
        gave it what it had always wanted – light regulation – the first time
        Labour had ever indulged The City in its hubris

        • Tom M

          “Labour had NO effect on the Banking System, it simply
          gave it what it had always wanted…..”
          You are missing the point. The Labour government was there to run the country not have “no effect” or “give them what they want”.
          Just like a dyfunctional family where the parents give in to every demand from the children. The results are the same only the scale is different.

        • HookesLaw

          It gave it no regulation. It gave it a total mess of a regulation system. Labour carried on spending money it could not cover byu revenues BEFORE the recession.
          Stupidity ruined (as an example) RBS, not fraud or greed.

          • Tom Tom

            I think you will find Fraud was rampant at RBS and HBOS but you are not in the loop Hookie and haven’t a clue.

          • Tom Tom

            The regulation system was modelled on the US system with Fed, SEC, CFTB, etc. It didn’t work in the USA either. Maybe it should be modelled on the HKMA ? However, you are probably too young to recall BCCI and Johnson Matthey which signalled the complete disaster of the Old Lady of Threadneedle regulating anything…….oh and that is before we look at the collapse and rescue of Midland Bank in 1973

            • MikeBrighton

              Er no, absolutely wrong. The regulatory system under Labour was quite different to the US model. In fact now it is like the US but not then. Not at all.

              It is generally understood that the regulatory system under Labour failed but in the US it was seen as much more successful but not without issues, which led to many changes in supervision over there as well.

        • 2trueblue

          It happened on their watch because they were unaware what was happening, being totally negligent.

          • MikeBrighton

            No it’s worse they were aware but loved that tax revenue so ignored the warning signs and red flashing lights

  • Shinsei1967

    Though no doubt we will have Fraser along in a wee while to point out that the UK is still borrowing too much.

    • Count Dooku

      Broken Record Nelson.

    • the viceroy’s gin

      Yes, it wouldn’t do to point out that the national debt is still skyrocketing, and could destroy the nation if interest rates suddenly rise.

  • telemachus

    But is it fair for all?

    • wobble

      Tony Blair sez ,…. of course it is ,sweety !

    • Robert_Eve

      Why does it need to be fair?

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