
Ryan Bourne: Don’t fret about this debt – at least not yet. Big tax rises would choke economic recovery.
If it proves a temporary blowout rather than permanent, accumulated debt levels being modestly higher looks manageable.
If it proves a temporary blowout rather than permanent, accumulated debt levels being modestly higher looks manageable.
How prepared are we for strict social distancing for the forseeable future, compulsory masks, closed leisure facilities – and a semi-functioning economy?
As in 2008, the line between survival and disaster will rest on the bond markets’ trust in the British Government and on the reputation of the Bank of England.
Hopefully it will be crisis averted, and we’ll have a bit more time to fix the hole. But sooner or later, difficult choices on tax and spending are coming.
Ministers can carry on trying, through the British Business Bank or directly, to push on this Gordian Knot – or slice through it.
Whether moderate right Conservative, or moderate left, austerity is dead, and this new age will be with us for a long time to come.
The reason we will get away with it again, as we did in the banking crash, is that there is so much deflation around, inflation is not a problem.
It may be necessary, given the Coronavirus, and could even work. But Britain has a long, long record of state spending failing to turbo-charge growth.
The Chancellor’s measures leave us well prepared to tackle its short-term challenges as well as helping to shape the long-term trajectory of the economy.
We are in danger of losing sight of the simple truth which has been a favoured phrase of Tory politicians through the ages: borrowing today is simply taxation deferred.
In the first piece of a mini-series, our guest author also argues the Government should look again at IR35, and make it more worthwhile to work.
My answer would be “maybe, provided the spending or tax cuts significantly improved our growth potential.”
Today’s pledge of a swift Tory National Insurance cut is welcome, but more importantly it sets the stage for an attack on Corbyn’s tax grab.
Labour is banking on our innumeracy. I don’t say that they are taking us for fools. Plenty of clever and educated people can’t process numbers on that scale.
And, the Chancellor notes in his Bolton speech, that excludes 59 Labour policies “which don’t have enough detail for us to cost fairly”.