{"id":11280,"date":"2011-08-02T10:19:22","date_gmt":"2011-08-02T09:19:22","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=11280"},"modified":"2011-08-02T10:19:22","modified_gmt":"2011-08-02T09:19:22","slug":"osbornes-goals-sinking-into-oblivion","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2011\/08\/02\/osbornes-goals-sinking-into-oblivion\/","title":{"rendered":"Osborne’s goals – sinking into oblivion"},"content":{"rendered":"

As the FT notes<\/a>:<\/p>\n

Bad economic news bombarded the Treasury on Monday as\u00a0new International Monetary Fund forecasts<\/a> cast doubt on the chancellor\u2019s deficit reduction plan, while near-term indicators suggested the recovery was losing the little momentum it had.<\/p>\n

The IMF judged that Britain\u2019s economy had less capacity to grow quickly over the next few years than the government had hoped, slowing the reduction in borrowing to the point where it comes within a whisker of\u00a0missing George Osborne\u2019s main fiscal target<\/a>.<\/p><\/blockquote>\n

They added more bad news after that, but let's stick to the IMF for the moment.<\/p>\n

The message is clear - Osborne has set out his\u00a0stall\u00a0based on the objective that the deficit should be cut and a downward projection for debt should have been established before the next general election. It was a simple criteria for success or\u00a0failure. He chose it for that reason. And it already looks certain that he won;t succeed in meeting it.<\/p>\n

Osborne's plan required growth - not least massive growth in tax revenues from an economy he thought would boom as he pulled back the state.<\/p>\n

But it's not. The reaction to his spending cuts is as any good\u00a0Keynesian\u00a0would have predicted: companies and consumers alike are cutting their\u00a0spending\u00a0in the face of the very real\u00a0prospect\u00a0of hardship that these cuts foretell,\u00a0including\u00a0the risk of \u00a0loss of income, unemployment and having \u00a0to make payment \u00a0for services that they reasonably expected the state to supply. This is the paradox of thrift<\/a>: \u00a0the rational attempt by \u00a0consumers and companies to save in the face of \u00a0attacks on their income \u00a0and \u00a0future ability to earn results in a loss of real economic activity, a reduction in income for all, and an inevitable \u00a0failure on the part of government to realise its objective of reducing its own deficit. \u00a0That is why, inevitably, George Osborne is not meeting its target.<\/p>\n

The downside is that the IMF \u00a0seems to think that the best reaction to this will be more cuts or tax increases, \u00a0and that's the exact opposite of what is required.<\/p>\n

Will they ever learn, or do we have to sink into oblivion first?<\/p>\n","protected":false},"excerpt":{"rendered":"

As the FT notes: Bad economic news bombarded the Treasury on Monday as\u00a0new International Monetary Fund forecasts cast doubt on the chancellor\u2019s deficit reduction plan,
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[96,35,42],"tags":[],"class_list":["post-11280","post","type-post","status-publish","format-standard","hentry","category-conservatives","category-economics","category-imf"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/11280","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=11280"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/11280\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=11280"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=11280"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=11280"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}