Economist David Blanchflower recently put forward an argument that the coalition Government's package of austerity measures - as outlined in Chancellor George Osborne's emergency Budget last month - is an all-or-nothing bid to revive and restructure the economy. In Blanchflower's view:
The worry is that the government has no plan B for what will happen if the data come in badly, as it surely will.Exactly this question - whether or not there is a plan B for economic recovery - was put to Osborne by the House of Commons Treasury Committee earlier this month, with Osborne's answer published in its report on the June 2010 Budget (PDF format, 301.2K).
The report states that the Committee "asked the Chancellor whether there was a plan B."
Osborne replied:
However, action to help prop up the economy is already being considered by the Bank of England Monetary Policy Committee (MPC). Minutes of the MPC's July 2010 meeting reveal that it discussed extending its programme of quantitative easing for the first time in five months.
Osborne replied:
The plan is to have confidence in the British economy and its ability to pay its way in the world. Of course, if you look at the fiscal mandate that I have set it is based on an assessment of the structural deficit to allow automatic stabilisers to operate. I have also built a degree of caution into the fiscal mandate by seeking to achieve it a year earlier.The Committee presents its own interpretation of these words as follows:
We welcome this as a signal that if economic conditions demand it he may be prepared to take measures to stimulate the economy, even if these delay the current plans for cutting the deficit.It remains to be seen if the UK's faltering emergence from recession will require such additional "measures to stimulate the economy."
However, action to help prop up the economy is already being considered by the Bank of England Monetary Policy Committee (MPC). Minutes of the MPC's July 2010 meeting reveal that it discussed extending its programme of quantitative easing for the first time in five months.
- Latest official data on UK economic recovery -including the first estimates for growth in gross domestic product (GDP) in the second quarter of 2010 - are scheduled for publication later this morning. Look for updates on XpertHR.
| Tweet |
|
| Permalink | Email this |
