General election 2010: The “sound and fury” of the economic debate

The economy – and what is to be done to enable ongoing recovery while tackling the UK’s record £163.4 billion budget deficit (external website) – has rightly emerged as the key issue in the election campaign, and has been hotly debated. But here the phrase “sound and fury signifying nothing” would appear relevant. Last night’s third televised prime ministerial debate (external website) was a case in point: little more in the way of detailed economic promises emerged, despite its ostensible focus on the economy.

Over the course of the campaign, endless hot air and column inches have been devoted to the back-and-forth over Labour’s planned national insurance increases for 2011, which the Conservatives branded a “tax on jobs” (external website). Sunday Times economics editor David Smith argues that business support for Conservative Shadow Chancellor George Osborne’s proposed reversal of Labour’s planned 2011 national insurance increases is curious, given that Darling would have been pilloried (external website) had he made the exact same promise in the Budget 2010. Smith therefore prescribes a healthy dose of scepticism toward all economic pronouncements from the main political parties until 6 May 2010 is past.

Meanwhile, Daily Telegraph business editor Alistair Osborne believes that the flare-up over national insurance is a political dead-end (external website). He says the main parties would prefer to focus on this as it represents “an issue almost guaranteed to make voters’ eyes glaze over. Better that than scaring them with a glimpse of the swingeing public spending cuts to come – whoever gets in.” Osborne believes we are seeing ” an election campaign straight from Monty Python”, involving four weeks of campaigning on just about everything but [...] the big issue facing all the parties – how to tackle the deficit that is strangling the life out of our economy.”

Each of the three main political parties has chosen to avoid setting out its stall on planned post-election austerity measures in too much detail. This could be because the likely severity of these measures might not play well with the public. Leaked comments from Bank of England governor Mervyn King take this idea further, suggesting that victory in the 2010 general election could prove a poisoned chalice (external website). US economist David Hale reports that King privately told him that “whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be.

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