Interesting way of looking at it:
If so, he would no doubt regard us as simpering cowards. We have just published an IPPR paper which argues, coincidentally, that a forecast of 1.5% growth or below is precisely the point at which the Treasury should draw back from deficit reduction to give the economy some breathing space.
Our reasoning, however, results not from want of backbone but simply because we believe that in a time of extreme uncertainty, it is vital that deficit reduction plans are as responsive as the economy is volatile. Pressing ahead with plan A when the economy is underperforming over the short term will not only compound a bad situation but is likely to make it even harder to meet important deficit reduction targets as tax revenues remain suppressed for even longer than is necessary.
So, in a time of uncertainty we will cdeal with that uncertainty by increasing the uncertainty about what the government is going to do.
Difficult to see the logic in that really.
But unlike the chancellor we believe this should be done not by setting pre-ordained annual targets for the next four or five years as outlined in the emergency budget but by committing to an average reduction in the deficit each year. So, for example, on current forecasts, an average reduction in the deficit of 1% each year would eliminate the structural deficit by 2016-17.
Are we to ignore mathematics as well as logic now?
How in buggery would a 1% cut pa in anything at all lead to elimination of that anything in only 5 years?
Given that the structural deficit is around 5, 6% of GDP, what we\’d actually need is a 1% cut in total spending each year to eliminate the structural deficit in 5 years.
Something which is, if I\’m not mistaken, larger cuts than those currently proposed, isn\’t it?
But then Adam Lent is one of those at the TUC who works with Ritchie…..