The new official analysis, based on a report from the International Monetary Fund (IMF), showed that Britain was running a so-called structural deficit of 5.2pc in 2007 – far higher than the 2.5pc initially stated by the IMF.
That\’s from the same IMF numbers that everyone is using to show that deficit spending is the cure to our ailments I assume?
And it\’s really most unKeynesian to be running a deficit of that sort of size at the top of the longest boom in modern history, isn\’t it?
Indeed, it rather adds weight to my contention that Keynesianism doesn\’t work. Not necessarily because deficits in slumps don\’t work (upon which I reserve judgement for this point_ but because policitians will never run the associated surpluses in the booms. That just isn\’t what the incentives are and thus not what will happen.