What does a Labour ex-minister think of deficits?

As the Telegraph reported:

Lord Myners, the former City minister, last night criticised Gordon Brown’s administration for living beyond its means and said he had been frustrated by his colleagues’ “flawed thinking” on the economy. “There is nothing progressive about a government that consistently spends more than it can raise in taxation,” he said.

Read more by or more about or .
This entry was posted in News.
Advert

3 Comments

  • Alex Sabine 10th Jun '10 - 1:32pm

    Of course what Lord Myners said is the merest common sense, yet it is a lesson that never seems to be learned by many self-styled progressives and indeed most British governments.

    Bond market discipline is not the only reason for seeking to limit public borrowing – although it is often only the threat or reality of rising bond yields that makes governments wake up to the need.

    There are other reasons: high levels of government borrowing can crowd out private savings and investment and impose burdens on future generations of taxpayers. There was never anything progressive about either of these effects.

    There is no necessary connection between balanced budgets and a low spending-to-GDP ratio – the likes of Sweden and Denmark ran budget surpluses during the good years at a higher level of revenues and expenditure than the UK, while we ran structural deficits.

    However, the tendency for structural deficits to coincide with periods of high public spending in the UK does suggest that governments resort to routine deficit financing (I’m not talking about fiscal stimulus or recession-induced deficits here) when they know they’ve reached the limits of what the public is prepared to pay for through taxation.

    Fiscal rectitude should not be the preserve of the political right (and indeed isn’t in much of the rest of the world); it’s time progressives of all party stripes grasped this and – rather than reluctantly backing the minimum fiscal tightening we can get away with – advocated an ambitious programme of fiscal consolidation to be sustained after the immediate ‘repair work’ is done so that we are better prepared going into the next downturn.

    This could take various forms, but I would say the rule of thumb should be to balance the budget in normal times and to run structural surpluses for some time after 2015 in order to get debt:GDP down to pre-crisis levels.

  • leekliberal 11th Jun '10 - 8:36am

    A nice soundbite summing up Labour’s financial incompetance that will no doubt be featured in many a Focus!

  • George Kendall 15th Jun '10 - 12:51pm

    Alex Sabine said “Fiscal rectitude should not be the preserve of the political right (and indeed isn’t in much of the rest of the world)”
    Indeed it is not. In the USA, the right have been the worst at running large budget deficits: cutting taxes while raising spending. GW Bush was the worst, but Reagan did it too.

Post a Comment

Lib Dem Voice welcomes comments from everyone but we ask you to be polite, to be on topic and to be who you say you are. You can read our comments policy in full here. Please respect it and all readers of the site.

If you are a member of the party, you can have the Lib Dem Logo appear next to your comments to show this. You must be registered for our forum and can then login on this public site with the same username and password.

To have your photo next to your comment please signup your email address with Gravatar.

Your email is never published. Required fields are marked *

*
*
Please complete the name of this site, Liberal Democrat ...?

Advert



Recent Comments

  • Barry Lofty
    [email protected] Sorry, but how long must the Lib Dems keep taking stick for the "Coalition" what is being done to our country since 2019 is beyond comparison and extrem...
  • Chris Moore
    David, you say, "The people had spoken. Lib Dems need to listen and take note." The Lib Dems have taken note! Surely!...
  • Peter Martin
    @ Catherine Dawson, "Climate Income returns the carbon price to householders as a dividend to mitigate against rising fuel prices, thus enabling the car...
  • Peter Martin
    If anyone is going to drive Germany to economic suicide, my money will be on the FDP who will take a far too narrow view of the country's responsibility to the...
  • Fiona
    Apologies for the double post - I got distracted from what I intended to say. Which is that I have actually set my recorder for Question Time tonight and there'...