Second, the deficit was smaller than expected this year and smaller than the economy needed. Tax drains funds out of the economy. That’s not by chance. That is its purpose. The government prints the money it needs to spend: it reclaims it through taxation. The spend stimulates demand. The tax reduces it. The net combination resulting in a fall in borrowing means that the economy was deflated by more than the government expected in the last year. The result is that we are, quite simply, worse offer as a result. And many know that.
So why does he want to increase the amount the government collects in taxes?
And he will need to do so: we know the economy is slowing already: it’s a trend that is going to get worse as the impact of Brexit pound deflation feeds though into higher UK prices.
Sigh, the net effect of a devaluation is expansionary.