I feel a comment on yesterday's fiasco from Osborne is essential, and yet wonder what there is to add.<\/p>\n
His\u00a0plan\u00a0is failing and what can I say but \"I told you so\"?<\/p>\n
The\u00a0reality\u00a0as as Robert Skidelsky has said in the Guardian this morning<\/a>:<\/p>\n The intellectual debate between George Osborne and his critics hinges on this single point: what is it that makes a deficit-reduction programme \"credible\"?<\/p>\n Let's start with the theory of the matter. \"Look after unemployment,\"JM\u00a0Keynes<\/a> said, \"and the budget will look after itself.\" This was a neat way of saying that a credible deficit reduction plan depends on growth.<\/p><\/blockquote>\n There are four engines for growth, and no more. They are:<\/p>\n 1)\u00a0Consumer\u00a0spending, and that's going down due to falling incomes, lack of confidence, rising unemployment and demands for more pension\u00a0contributions\u00a0from\u00a0public\u00a0sector workers, plus VAT rises.<\/p>\n 2) Business\u00a0investment, and that's falling because consumers are spending less.<\/p>\n 3) Exports, and the Eurozone is now killing those.<\/p>\n 4)\u00a0Government\u00a0spending.<\/p>\n That's it. That's all you need to know about where growth can come from.<\/p>\n And the first three are all in decline, although business is increasingly profitable, perversely (and are lending their profits to\u00a0government\u00a0rather than investing it - that and\u00a0quantitative easing are how the deficit are being paid for).<\/p>\n So, given these facts (for these are facts at present) then there's only one way to go forward, and that is for the\u00a0government\u00a0to spend more. If it doesn't then the cycle of decline continues. That is inevitable.<\/p>\n