Blatant misinformation from the FT

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FT.com / UK / Economy & Trade - UK deficit warning from City economists.

The FT notes:

Britain is in danger of succumbing to a budgetary crisis this year, with the economy likely to stay in the doldrums until at least the end of 2010, a Financial Times survey of economists warns.

Sir John Gieve, former deputy governor of the central bank, said that inadequate plans for addressing the fiscal deficit could result in sharp rate rises and a fall in the pound.

Howard Davies, director of the London School of Economics and a former member of the Bank of England’s monetary policy committee, said: “The major risk is the loss of confidence in the government’s ability to get the public finances back under control.”

The impression given is clear: the headline is "UK deficit warning from City economists". You'd presume the message was unambiguous: cust now would seem to be the demand.

But it's not:

Asked to name the three biggest risks to the economy, 37 of the 79 economists polled said the UK was threatened by a fiscal crisis that could derail any revival.

That's almost certainly true: but belief that the causation of the crisis is as Davies and Gieve suggest does not follow. Indeed as the FT notes at the very end of the article:

But economists were divided over what to do about the threat of a fiscal crisis.

Half of those polled backed the Conservatives’ view that action to cut spending and increase taxes was needed urgently in 2010. Half warned that such rapid reduction in borrowing would undermine the recovery.

Which rather proves the whole tone of the article by the FT was horribly biased.

No surprise there though.