Darling to use revenues to cut debt

Posted on March 19 2010

FT Alphaville » Darling to use revenues to cut debt.

Alistair Darling plans to use a revenue windfall to trim projected UK borrowing by £5bn to £10bn in next week’s Budget, making debt reduction a priority as he tries to put public finances on a sounder footing.

[O]fficial data on Thursday showed that receipts had not fallen as much as the chancellor feared in December. Public spending is on course to end the year close to target, meaning that the government will be in the red by about £170bn.

That's a sop to the market that may be politically necessary for the moment, and highly timely.

But to think that deficit cutting is the priority is a massivce mistake.

Employment is the priority. The deficit wiull look after itself when people are in work as Keynes said.

And as for the EU's demand the deficit be 3% of GDP - that's just bankers being *ankers. This is a wholly arbitrary rule of complete inconsequence made in different circumstances that they want to enforce to increase unemployment, suppress wages, increase the divides in society and to undermne democracy.

So they should be ignored - along with their friends in the rating agencies.

Keep spending, I say.

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2 Responses

  1. alastair says:
    March 19 2010 at 3:28 pm

    “Employment is the priority. The deficit wiull look after itself when people are in work as Keynes said.”

    Keynes might have agreed with you about the priority, but not about your follow up.

    The structural deficit by definition will not look after itself when people are in work. Nor will it look after itself if growth returns to pre recession levels.

    http://en.wikipedia.org/wiki/Structural_deficit

    this one is as good a definition as any.

    • Richard Murphy says:
      March 19 2010 at 3:54 pm

      Of course

      The spending has to stop when full employment is approached, of course

      And yes, then the structural deficit need to be addressed

      Shall we worry about that then when we get anywhere near it being an issue?

      Richard