Plus: Treasury and Work & Pensions lessons. Greenlighters v the rest. Remembering Attlee’s surplus. And: the key question now is “how”, not “what”.
Two extreme versions of what happens next in Britain. Events are more likely to end up somewhere in the middle.
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.
The theoretical aim of policy then should be bridging over what is hopefully a short pause in activity – eliminating near-term distress for households and businesses.
The implications of the crisis are such that Johnson and Sunak need not so much to think outside the box as to trample it to tatters altogether.
The fact that Darlington station was explicitly addressed in his statement is a great sign of how swiftly the Chancellor has mastered the detail of his brief.
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 Coronavirus will punch a hole in Sunak’s sums sufficient to throw levelling-up, Boosterism, Brexit bonuses – what have you – off course.
The Treasury often fails to recognise the potential benefits of lower taxes, because they don’t properly factor in how behaviour changes.
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.
Blanket calls for higher wealth taxes may play poorly, but plenty of specific measures poll well and these voters are not crying out for tax cuts.
My answer would be “maybe, provided the spending or tax cuts significantly improved our growth potential.”
Would the Government have the bottle for planning, childcare and police overhauls – and will Downing Street sign up to this plan anyway?
As a former Chief Secretary to the Treasury, I am uneasy about the bail-out of Flybe. Every time a private business is bailed out by the taxpayer, the pressure grows.