From the Guardian, this morning:
The current recession is even deeper than had been thought - and started more than a year ago - as statisticians today revised the drop in national income in the first quarter of the year to 2.4%, the biggest fall since 1958.
The annual drop in output in the January to March period is now said to be an all-time record of 4.9%, fresh Office for National Statistics figures showed.
Economists had expected a downward revision to the initial estimate of a 1.9% drop in gross domestic product, because of a recent revision to construction sector output. But the new figures are much worse than expected.
Let’s be clear: I do not define growth as good, per se. â€šÃ„Ã²Enough economics’ will certainly be arguing against that simplistic and unsustainable assumption.
But let’s also be clear, disorganisation and chaos don’t help, and that’s what we’re at risk of, and any action by the government of the UK (any government of the UK) to cut spending is only going to make the situation worse.
First, government cuts reduce employment further. there are no other jobs so the consequence is unemployment.
Second that reduces demand further.
Third, governments unlike business can and should invest counter-cyclically: not doing so reduces demand and jobs still further.
Fourth, we’re then ill prepared for the necessary new business environment that always follows a recession or depression — and this looks like the latter now.
Fifth, because of the compounding effect of the lost economic activity because of cuts, the tax paid on the jobs lost because of the cuts and the increase in government costs reducing government spending will actually almost certainly cost the government more than maintaining the status quo when its overall financial position is considered — but society as a whole would be better off without those cuts.
So why are neither the Tories or Labour Keynesians now? Because that’s exactly what the country needs them to be.