Two interesting articles, one in The Daily Mail and the other in The Guardian, it will be interesting to see what SPIN the Chancellor will put on them ;-)
1) Britain yesterday was branded a ‘crisis economy’ by incoming Bank of England governor Mark Carney and the International Monetary Fund has slashed its growth forecast for the UK over next two years.
The Canadian, who takes over from Sir Mervyn King in July, compared the UK with basket case countries in the Eurozone in a brutal assessment of the economic outlook.
2) The error that could subvert George Osborne's austerity programme - it is reported that the theories on which the chancellor based his cuts policies have been shown to be based on an embarrassing mistake.
Re (2) Talk about egg on his face!
He can't really be blamed if he was given duff information to work with. It's probably too late to do a hand brake turn. The IMF worked from the same spreadsheet!!!
The spreadsheet was used to draw the conclusion of an influential 2010 economics paper: that public debt of more than 90% of GDP slows down growth. This conclusion was later cited by the International Monetary Fund and the UK Treasury to justify programmes of austerity that have arguably led to riots, poverty and lost jobs.
The correction is substantial: the paper said that countries with 90% debt ratios see their economies shrink by 0.1%. Instead, it should have found that they grow by 2.2% – less than those with lower debt ratios, but not a spiralling collapse. Yet cutting public spending to avoid that contraction has become a linchpin of both George Osborne's and the IMF's policies.
I don't fully agree that he can't really be blamed if he was given duff information to work with.
I am not a great fan of Ed Balls nor the current Labour crowd but they have been telling the Chancellor that his policies were flawed, as has Vince Cable and many respected economists. Also reading between the lines to the various speeches of Mervyn King and other Bank of England officials, they have not always come over as being totally in favour of the Chancellor's plan for dealing with the economy.
No doubt when the Chancellor has read today's papers he will be wishing the Whitsun recess could start on the 21 April 2013 and not the 21 May 2013 ;-)