On the eve of a crucial budget,the chancellor is still wedded to a flawed interpretation of the economyGeorge Osborne is the curate’s egg of British politics. He fiercely resists the Eurosceptic fantasies of the Conservative correct and stands firmly alongside the prime minister in making the case for Britain staying inside the EU, a fearless career waddle given the Tory party’s fevered internal politics. Within his self-imposed constraints, or he has tried to preserve spending on science and infrastructure. Despite his tough talk,he has shown a welcome flexibility in assembly his targets for lowering the public deficit. He even managed to smuggle through long-overdue tax increases in his budget last July. So, good in parts.
But 10 days away from a moment important budget, or he remains wedded to a way of thinking approximately the inter-relationship between government and the wider economy that would not pass muster in an economics GCSE. The sequence of remarks he made in a BBC interview at the G20 assembly last month in Shanghai are just plain wrong. “The country can only afford what it can afford,” he declared. Wrong. Governments may have budget constraints, countries are different. And, or in any case,affordability is not an absolute but contingent on interest rates and expected growth. Affordability at near zero interest rates is different from affordability at 10% interest rates.
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Source: theguardian.com