- The UK economy is presently operating at 10% below its pre-crisis trend (which means there's lots of idle capacity, of capital as well as people)
- the UK Government is able to borrow at a real rate of interest below 1% (which means it's not a bad time to be in debt)
- the average maturity of UK debt is 13 years (which means there's no need to panic at the moment)
- the UK's debt to GDP ratio was 68% at the end of last year, against 73% in Germany and 77% in France (which means that our so called "black hole" is rather smaller than those of some of our neighbours.)
Liberal Democrats in government, heirs to he party of Keynes and Beveridge, may be forced, as junior partners in the coalition, to stand aside as the present foolish policies are implemented, but they should be arguing against them in private and withholding vocal support in public.
Martin Wolf's analyses in the FT of the financial crisis and the policy choices have been really sharp and head and shoulders above the general level of press comment. More generally you might enjoy this debate he had with Alex Callinicos of the Socialist Workers Party on the future of capitalism
ReplyDeletehttp://leninology.blogspot.com/2009/11/alex-callinicos-v-martin-wolf.html
Like you I suppose that Lib Dem acceptance of cuts this year was part of the price of the coalition, and after all £6b is a small sum. I saw somewhere however that David Laws was keener on cuts now than Vince Cable et al. It was sad that Laws had to go for what seemed to me to be a perceived rather than a real transgression, especially after his impressive performance in last week's Commons. debate. But his apparent hawkishness on the deficit would I think have led to some problems in the Lib Dems before long.