Friday, February 19, 2010

BBC News - Economists back delay on government spending cuts, 60 major Economist for Labour, only 20 for Tories. Yes I got that right.

More than 60 senior economists have signed two open letters that back the chancellor's decision to delay government spending cuts until 2011.

The letters in the Financial Times say that any measures to trim the budget deficit this year could risk dragging the country back into recession.

They are a riposte to the 20 economists who on Sunday, backed the Conservatives' call for cuts this year.

Those economists said cuts were needed in 2010 to reassure the markets.

They put this forward in a letter to the Sunday Times.

The Treasury recently said it it hoped the public deficit - the difference between government spending and the income it receives through taxation and other sources - would stay below £170bn for the current financial year.

Figures released on Thursday showed that the government had to borrow a further £4.3bn in January to help cover the deficit.

'UK's image'

Those signing the two new letters include two Nobel laureates - Robert Solow and Joseph Stiglitz - and five former members of the Bank of England's interest-rate setting committee.

One of the letters, organised by crossbench peer Lord Skidelsky, accused the authors of The Sunday Times letter of trying to "frighten" the public over the scale of the deficit.

It asks how "foreign creditors will react if implementing fierce spending cuts tips the economy back into recession".

"For the good of the British public - and for fiscal sustainability - the first priority must be to restore robust economic growth," it says.

The other, organised by Lord Layard, emeritus professor of economics at the London School of Economics, says Mr Darling's plan for reducing the deficit was "sensible".

"While unemployment is still high, it would be dangerous to reduce the government's contribution to aggregate demand beyond the cuts already planned for 2010-11," it says.

'Wrong bandwagon'

The issue of reducing the government's deficit and wider public debts has become a political battle ahead of the general election.

A Conservative spokesman said: "Twenty leading economists, plus business leaders, including Richard Branson, agree with us that the failure to have a credible plan to reduce the deficit threatens to undermine the recovery and push up interest rates.

"We are happy to have that debate with the government."

But a spokesman for Mr Darling said that the latest letters showed that shadow chancellor George Osborne had "jumped on the wrong bandwagon".

"His judgment is wrong and his approach would risk derailing the recovery," the spokesman said
BBC News - Economists back delay on government spending cuts

Let be perfectly blunt about the state of the UK economy.  Last year it looked like we were headed for a massive Depression, and Tories could have rolled in talking about jobs, housing prices, and failing banks.  BUT Brown has done an excellent job reducing all these problems compared to the rest of the world.  So now all the Tories have as an issue is the fact it cast money to combat the issues. 

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