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Monetary activism must end in a slump


On Friday, I spoke against monetary activism once again, complaining about the use of expectation management and new monetary instruments in an attempt to defibrillate the economy. It’s a mistake, not least because a failure to contain inflationary expectations could be catastrophic, as I set out last year. Mark Carney understands the argument that monetary activism will cause a damaging “intertemporal misallocation of capital” but he chooses to believe wise intervention elsewhere can compensate. I am sure this is wrong. […]

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Budget 2013: The Headlines


The following was provided by the Conservative Party in summary of the Budget 2013. In a tough economic situation, the British people know there are no easy answers or short cuts. But we are succeeding, slowly but surely, in fixing those problems. We’ve now cut Labour’s record deficit by not just by a quarter – but by a third. We’ve helped create 1.25 million new private sector jobs. Interest rates remain at record lows. Income tax The amount people can […]

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The moon landings and the trajectory of public spending


Ahead of the budget, the TaxPayers’ Alliance reports, More Britons believe the moon landings were faked than think that taxes are too low. Headlines include: People underestimate the real rate of tax on their income. Fewer than one in seven people realise the Government plans to increase the debt, not reduce it. Most do not understand the impact of Employers’ National Insurance. Most people have no idea how much money the Government is spending on their behalf. And, earning the […]

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I won’t support Labour on fuel duty – or duck the issue of spending


Today, we’ll be debating an Opposition Day motion on fuel duty, which I want cut. It’s shocking that 60% of the pump price of petrol is tax. Nevertheless I won’t be supporting Labour. It’s one thing to be supported by Labour on a important constitutional point — Parliament’s control over our EU budget contribution, for example — but it is another to support them on an Opposition Day designed to injure the Government. In any case, fuel is 10p a […]

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A massive failure of journalism is being corrected


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Via It’s austerity all right – but not of the kind we actually need, City A.M.’s Allister Heath makes his case: It has long been a theme of this column that the government and its critics alike have exaggerated the extent of the government’s belt-tightening. The coalition is doing this to try and reassure the bond markets while seeking to minimise the hit to the public sector; the opposition because it wants to blame the recession on “the cuts.” But […]

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Monetary activism caused the crisis and may cause a worse one later


Last night in the Budget debate, I set out how “monetary activism”, which is one of the pillars of the Government’s strategy, could go wrong: This is a Budget of fiscal conservatism and monetary activism. It is a Budget, above all, of economic expectations, setting out to people that we will reward work, support families, help those looking for work, back business and back aspiration. In the short time available to me, I would like to speak directly to the […]

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The Budget 2012 – charting our dependence on fiscal and monetary expansion


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Today, the Chancellor unveiled a Budget widely trailed in the press. We’ll all be pouring over the documents in the next few days and I plan to speak on Monday. In the meantime, I thought this chart from the Budget Red Book was particularly revealing about our country’s position: It shows just how dependent our country became on fiscal stimulus plus bank balance sheet — i.e. monetary — expansion. All those who recommend fiscal and monetary measures to get the […]

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Sound reasoning on national wage settlements – from LibDems


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Via Time for the Lib Dems to blow the final whistle on national wage settlements: Unsurprisingly, recruitment and retention rates in the most deprived parts of the country are well below those of the more affluent. Under normal market conditions, this would be reflected in the pay and conditions: tougher work would be better rewarded. In this country, we hope that our public sector ethos will somehow make up the difference, that there will be enough local heroes willing to […]

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Supporting FairFuelUK for a cut in fuel Duty


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According to a CEBR Report for the Fair Fuel UK campaign: Our findings suggest that a 2.5 pence reduction in fuel duty would result in the creation of 175 thousand jobs within a year and 180 thousand jobs within five years of such a reduction. Such a reduction, we estimate, would not result in any fiscal loss to the Government, while GDP would receive a boost of 0.32 per cent within a year and 0.34 per cent within five years. Now, […]

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Autumn statement chart of the day: public sector net debt


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Via the Chancellor’s Autumn Statement (PDF), the revised trajectory of public sector net debt: City AM reported back in July on a poll that, asked whether the coalition would be keeping the national debt the same over the next four years, increasing it by £350bn or cutting it by £350bn. Just nine per cent got it right – 21 per cent thought it would be staying the same and an astonishing 70 per cent thought the national debt would be […]

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