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The Economic Speech The Tory Goverment Should Have Given

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Martin Wolf in the FT on what the Chancellor of the Exchequer should have said when it got into power, rather than box itself in with a rigid economic philosophy that clearly isn't working:

“Our country is in a deep economic and fiscal hole. This is the result of mistakes made by, and under, our Labour predecessor. It is this government’s intention to remedy this by eliminating the structural fiscal deficit over this parliament. I present today our plans to do so.

“Unfortunately, we cannot be at all sure how big the structural deficit is. Nor do we know what shocks will befall the world economy. Nor do we know how the UK economy itself will perform.

“Should the economy and the fiscal position not evolve as we hope, we expect that automatic fiscal stabilisers and monetary policy would sustain the recovery. If that turns out not to be the case, we will be prepared to use all the instruments at our disposal, including, if necessary, fiscal policy, to sustain recovery. Whatever we do in response to adverse events, we will maintain our goal of eliminating the structural deficit by the time the economy has finally returned to health, though we cannot know when that will be.”

“I am sorry I cannot be more specific. But this is the only sort of policy that makes sense in these desperately uncertain times.”

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