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Wednesday 20 March 2013

Unkit 2 & 4: Fiscal Policy - Osbourne style


It is the Budget announcement this week so it might be good to focus on fiscal policy on this blog.

This radio piece by Evan Davis might make a good place to start - seven minutes from the Today programme, in which he examines the objective of simultaneously growing the economy and shrinking public spending. 

In the first half of the programme there is a comparison with 2003-4, when government spending as a proportion of GDP was the equivalent of what the government hopes to achieve for 2017-8, at just under 40%. This includes an excerpt from the Budget speech of an optimistic Chancellor of the Exchequer Gordon Brown, happily declaring that the UK no longer suffers from "...the old British disease of stop-go". 

In the second half there is a discussion with Paul Johnson of the IFS (Institute for fiscal studies) about the room for manoeuvre available to the current Chancellor as he prepares this Budget, which highlights the extent of the cuts since 2010, and the opportunity cost of maintaining spending on health, pensions and schools on all other areas of government spending.

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