why the hell is he calling for a tax cut?

is it really so hard to identify worthwhile investment projects, hire workers, and get on with it?

@1 Luis

Presumably because he thinks that current policies are endangering economic prospects, and that cutting taxes will stimulate growth. From the discussions on the radio this morning, he was also pointing out (rather cleverly I thought) that the current head of the IMF’s recent praise for the Coalition’s approach should be read in conjunction with his previous support for the UK’s membership of the ERM.

If he can convince enough people that, like the IMF experts, the Coalition are as wrong now as the Tory government was then, he may have a chance of convincing more people that Labour weren’t at fault for what happened in recent years, which is the line the Coalition obviously want to push.

What Really Matters for Growth (It’s Not Tax Rates)

[ok, ok, I'm sure tax cuts are stimulative, but I'd rather see a more direct attack on unemployment and underinvestment in infrastructure etc.]

“The debate shouldn’t be about the extent of the deficit but how well the economy is doing.”

But surely he needs to ‘join the dots’ between growth and deficit reduction? The message shouldn’t be ‘we want growth *instead of* deficit reduction’; it should be ‘we want growth *and* the deficit reduction that goes along with it’.

“why the hell is he calling for a tax cut?”

Politically easier than investing in things to cut unemployment and improve infrastructure. The latter gets you attacked by the TPA regardless of success.

“The debate shouldn’t be about the extent of the deficit”

Yes, yes it should.

But let’s face it, Brown and Balls were the chief architects of the massive increase in state spending, and the large increase in the structural deficit, and Sunny is the cheerleader-in-chief, so what were we expecting from his piece. Rational analysis?

“Brown and Balls were the chief architects of the massive increase in state spending”

Massive increase? That’s garbage. I set out to see what international comparisons I could find in accessible OECD data. The results of that quest surprised me:

General government expenditure in 2007, before the financial crisis, as a per cent of national GDP – selected countries reporting higher percentages than the UK:

44.0% UK
52.6% Sweden
45.8% Portugal
48.8% Austria
51.0% Denmark
47.3% Finland
52.3% France
44.4% Greece
47.9% Italy
45.5% Netherlands

Source: OECD National Accounts At A Glance 2009 – Table 16.1 Total general government expenditure
http://www.scribd.com/doc/44866925/National-Accounts-at-a-Glance-2009-OECD

Readers will need to be patient and scroll down to find Table 16.1

Another source online: OECD National Accounts At A Glance 2011 (forthcoming)
http://www.etui.org/en/content/download/14316/76037/version/1/file/OECD+-+Brussels+2011.pdf

Martin Wolf in the FT: Can we not at least blame Mr Brown for the bloated public spending and grotesque fiscal deficits? Yes, but also only up to a point. Between 1999-2000 and 2007-08, the ratio of total managed spending to GDP did rise from 36.3 per cent to 41.1 per cent. But the latter was still modest, by the standards of the previous four decades. The jump to a ratio of 48.1 per cent, forecast for this year in the 2010 Budget, is due to the recession. Nominal spending is currently forecast at 3.5 per cent higher in 2010-11 than forecast in the 2008 Budget. But nominal GDP will be 10.3 per cent lower and tax revenues 16.4 per cent lower. Critics of his fiscal policies were right, but the error was far larger than anybody imagined. It is true, however, that Mr Brown must take a share of the blame for Labour’s failure to ensure the extra spending would be well managed.
http://www.ft.com/cms/s/0/3074d7ba-5ec0-11df-af86-00144feab49a.html

Where Brown and Balls are to blame IMO is for only lightly regulating the banks to rein back the destabilising boom in bank credit – such as those 120 % loan-to-value mortgages.

Massive increase? That’s garbage. I set out to see what international comparisons I could find in accessible OECD data. The results of that quest surprised me

If you’re trying to refute claims that public spending increased, then looking at international comparisons is pointless.

Total public spending 1997: £316bn
Total public spending 2010: £669bn

As percentage of GDP 1997: 37%
As percentage of GDP 2010: 45%

Figures taken from http://www.ukpublicspending.co.uk/

The figures speak for themselves really.

@8: “If you’re trying to refute claims that public spending increased, then looking at international comparisons is pointless.”

But I’m not disputing that government spending increased since 1997. What I’m saying is that pre-crisis in 2007, General Government Expednitures in the UK were not inordinately high by comparison with other west European countries – a very obvious comparison to make in this public debate and one that is hardly ever made despite the availability of relating, comparable data.

As for how much government expenditure was to blame for the crisis, see the analysis by Martin Wolf quoted @7: “The jump to a ratio of 48.1 per cent, forecast for this year in the 2010 Budget, is due to the recession.”

Government tax revenues shrank with the recession and that is the principal cause of the budget deficit. The recession has been international in scope and that can hardly be blamed on Brown and Balls.

The fact is that on the evidence, much effort has gone into political spin to mislead the public.

What will matter is whether consumer spending, business investment and net exports will increase sufficiently to make up for the government spending cuts which have barely begun. So far, official data are not encouraging – hence the mounting pressure on Osborne for Plan B.

9 –

“Brown and Balls were the chief architects of the massive increase in state spending”

Massive increase? That’s garbage.”

Tim J

If you’re trying to refute claims that public spending increased, then looking at international comparisons is pointless.

Total public spending 1997: £316bn
Total public spending 2010: £669bn

As percentage of GDP 1997: 37%
As percentage of GDP 2010: 45%

Figures taken from http://www.ukpublicspending.co.uk/

The figures speak for themselves really.

That is disingenuous bollocks and you know it.
The comparison with 2009 is far more meaningful. Every country in the world had a huge jump in public spending in 2010. Britain would have done regardless of the spending levels 1997-2009 and regardless of the government.

The crash of 2008-9 was the biggest economic shock in nearly 80 years, it is hardly a normal situation.

AFZ