60 economists can be wrong

When I wrote in support of the 20 economists who sent a letter to the Sunday Times urging quicker action to tackle the deficit, the one gnawing worry in my mind was the past foolishness of economists writing letters to papers. This morning more than 60 economists have put my mind at rest. A majority of those signing letters have decided to back the wrong side of the argument, restoring my faith in the way the world works!

Readers of this site will be tired of hearing of the build up of unsustainable public debt. This is indeed a very slow crash so far. Unfortunately the fact that to this point it is slow and happening in little steps rather than as a headlong rush does not make it any less real.

The government is now having to pay more for its borrowing than a year ago, despite the purchase of £198 billion of government debt by the Bank of England. The pound is inching lower, and has already devalued by around one fifth in this crisis. This morning the pound is at $1.54, comparing it to another heavily indebted country.

Interest rates for the private sector have been forced up to high levels, with people haivng to pay 18.5% for credit card borrowings and 4.5% for a mortgage. Businesses are paying well over 5% and some over 10%. This is the price of regulatory failure over the banks and the weak bank balance sheets which the government finances and the rash monetary policies have created. There is a price to pay for excess public spending, in short term higher rates for the private sector, and longer term higher taxes to squeeze enterprise more.

It is intruiging that only now have some of the newspapers really gone to town on the debt. Yesterday’s figures showing the state borrowed another £4 billion in January were not especially shocking. They were, as the Treasury points out, the kind of figures you would expect given the published forecasts for massive borrowing this year.

There are signs of hope in the reaction. The fact that January is usually a month when revenues exceed spending is just an excuse. I guess what is happening is that the British establishment is coming round to the view of the 20, not the 60 economists. Lots of “serious” people now agree that the deficit is too large. It is time for a new Dunning resolution – “The debt has increased, is increasing, and ought to be diminished”.

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61 Comments

  1. Ian Jones
    Posted February 19, 2010 at 8:42 am | Permalink

    The speculators have already started on UK debt, yields creeping higher every day. The Establishment must surely know that time is quickly running out before action will need to be taken.

    Life support is also being removed from the system, the UK not extending the special liquidity scheme and the US raised bank borrowing rates and their 1.3 trillion mortgage clean up is almost done.

  2. alan jutson
    Posted February 19, 2010 at 8:46 am | Permalink

    Sadly your forecasts over very many months made on this site and elsewhere are proving to be correct.

    I congratulate you on refraining from saying "I told you so".

    We have yet to hear "Lessons will be learnt" from the Government.

    If only more people, especially the media, would have woken up earlier and put pressure on the Government we may not be where we are now.

    Just out of interest, I have the feeling that many Primary Health Care Trusts will be looking to cut Budgets for next year, as will many Councils.

  3. Mike Spilligan
    Posted February 19, 2010 at 8:58 am | Permalink

    Another illuminating comment.
    However, I hope that this 20 vs. 60 doesn't mean the start of "scoreboard" journalism; and wasn't there a famous letter in the days of the Blessed Margaret signed by 360 academic economists – and they were all wrong?

    • waramess
      Posted February 19, 2010 at 10:41 am | Permalink

      Ah yes, but 25 years later they said they had misunderstood the question. Ingenious.

      • Stuart Fairney
        Posted February 19, 2010 at 11:32 am | Permalink

        I would perhaps call it non-genius, the utter absence of genius or anything remotely like it.

        • waramess
          Posted February 19, 2010 at 4:33 pm | Permalink

          But imaginative and perhaps even a little inventive?

  4. Russell James
    Posted February 19, 2010 at 9:17 am | Permalink

    How about tackling this huge debt (which was significantly caused by Gordon Brown) by taking radical steps?

    Start by telling the public you intend to raise VAT to 25% so that people who spend the most pay the most, a much fairer system.
    Scrap the vehicle road fund licence and use an extra few pence per litre on fuel. This would again be fairer as those who drive high mileages or use large cars, would pay more towards the upkeep of roads. Additional revenue would be gained by removing all those who currently do not have any road fund licence and cutting out all the administration.

    As a softener to the 12 million pensioners who are on abysmal income, and the low paid workers who Brown robbed with the removal of the 10 pence tax band (many more millions), raise the starting allowance of tax free earnings to £10000 for only these categories (pensioners and Lower than £24000/year paid workers. People paid above the national average would keep the current allowance of £6300.

    I also think the EU cannot be left out, if you want to get what may be a huge amount of votes (people who are going to leave the conservatives and vote UKIP).
    You must say you will have a referendum with 3 choices.
    1) Leave the EU
    2) Revert back to common market principles (which is what people voted for last time
    3) Remain as we are.

    I think major thinking and actions such as these would not be unpopular and get the conservative party a large majority in the election.

    • waramess
      Posted February 19, 2010 at 10:44 am | Permalink

      How about not raising taxes at all, just drastically reducing the cost of government. The bond market will wait, so long as a credible plan is in hand, and raising taxes will be an act of failure by a government who reach for the bluntest instrument in a crisis

      • Russell James
        Posted February 19, 2010 at 12:25 pm | Permalink

        I agree with A.Sedgwick. Certainly government and parliament (commons and Lords) and all public services especially Quangos require drastic reductions, but the VAT increase can help reduce the debt as well as allowing the real earners of the UK economy (manufacturers and exporters) a better more attractive tax regime.

        • APL
          Posted February 19, 2010 at 4:49 pm | Permalink

          Russell James: "but the VAT increase can help reduce the debt.."

          VAT is a European Union tax, it is also one of the most beaurocratic and complicated taxes.

          We should revert to a straight forward sales tax, payable at the point of sale.

    • grahams
      Posted February 19, 2010 at 5:48 pm | Permalink

      Higher VAT also means higher public spending on any payments that are index-linked, such as state pensions and benefits, requiring even more taxes to pay for the extra spending and thereby ratcheting up the size of government. It will also raise costs of remaining private pensions, pushing up companies' pension deficits. Not a panacea then.

  5. A.Sedgwick
    Posted February 19, 2010 at 9:21 am | Permalink

    The Brown economic disaster is slowly unravelling as you suggest – it is of Greek proportions. Devaluation is a palliative not a cure, it can also be addictive. As a prominent German said – your experiment in concentrating on the service industries is interesting but we will stick to manufacturing. How right he was. One of the many indictments of Nulabour, which trashes proper Labour history, is their pursuit of City tax gold at the expense of manufacturing.
    Whilst state costs have to be reduced dramatically and quickly, production and manufacturing have to be massively encouraged. It is time for the tax regime for service and production/manufacturing companies to be split. As valuable and essential services are, our economy was built on manufacturing and engineering not laundries. Corporation tax and CGT for production/manufacturing should be lowered to 10%, paid for by an increase in VAT if necessary. This would improve inward investment, reduce the export of manufacturing and increase the export of goods.

  6. Steve Tierney
    Posted February 19, 2010 at 9:21 am | Permalink

    Economists are, for the most part, readers of tea leaves and head bumps, using overly technical terms for fairly simple concepts in order to preserve the illusion of both their knowledge and reality.

    There are a few genuine economists in the batch, though they are few, far between, and almost certainly didn't belong to the sixty quoted above.

    Humble opinion only, of course.

    • waramess
      Posted February 19, 2010 at 10:46 am | Permalink

      "There are a few genuine economists in the batch," then God help us all

      • Lola
        Posted February 19, 2010 at 2:56 pm | Permalink

        We're all economists. And that's the problem. We know more about how to run the economy than any economist does, let alone any government. It does not suit the elites to recognise this, and go away. I mean what would they do? Who would pay for their 1st class travel eh? Nick and Pete? eh?

        The best 'economy' you can make is to get out of the way of the people. And that leads straight to very small government and low taxes. And that means ultimately goodbye EU.

        • waramess
          Posted February 19, 2010 at 4:35 pm | Permalink

          I'll second all of that

  7. brian kelly
    Posted February 19, 2010 at 10:19 am | Permalink

    'Readers of this site will be tired of hearing of the build up of unsustainable public debt.' No, I won't, John Redwood. Nor, I suspect, do the vast majority who read your valuable articles. It needs to be said again, and again, and again, – as do so many other things.

  8. Chris Goften
    Posted February 19, 2010 at 10:26 am | Permalink

    Given the fact that the majority (90%+) of economists are always wrong why does anyone take any notice of them. Almost none of them predicted this depression when it was obvious to anyone that could read the signs. We continually get predictions from them that are as accurate as long range forecasts from the Met Office.
    The problem is most economists don't look at history to point to what is likely to happen. And I don't mean just the 1930's. Look back at all the economic bubbles that have happened and they would see that once they are burst they don't re-inflate. The game changes. All the predictions of "recovery" you hear fail to say what we are recovering to. Massive household debt? Unsustainable house prices? Profit centered around lending money rather than making things with it?
    We had all better get used to the facts that the bubble is gone, resources are getting scarcer by the week, government debt will either be cut voluntarily or by the collapse of the bond market and sterling, and last but not least, living standards for the average British serf are going to fall a lot.

    • Lola
      Posted February 19, 2010 at 3:04 pm | Permalink

      An awful lot did predict it, but they do not get quoted on the lefty MSM. For example the Adam Smith Institute, the Mises Institute various other freedom and markets philosophers all predicted that Brown's Boom would end in Brown's Bust. As does the literature of freedom and markets and fiat currencies. But what none of them knew, as neither did Mr R, is just exactly when the bust would happen and what would trigger it.

      My firm predicted it for our clients. We have positioned portfolios in the expectation of it. We've had 'phone calls that go something like 'I bet you're feeling smug?'. Our response? 'I'd rather, Mr Client, that we were both richer than I was right". But we could not know the timing. And this is the point. You have to spend effort defending people from the inevitable and this constrains the risk they can take hence denying risk capital to enterprise. It's a certain downward spiral of wealth destruction. That's socialism for you. Wealth destruction on a stick.

  9. Richard Manns
    Posted February 19, 2010 at 10:27 am | Permalink

    Well, if the lesson ever needed to be relearnt, we can all recall how a bunch of economists declared that Thatcher was going to ruin the economy in the 80s with her nasty monetarism!

  10. Letters From A Tory
    Posted February 19, 2010 at 10:34 am | Permalink

    It's still up to the Conservative Party to help the public make sense of the government debt figures, because it is far too intangible to take about billions and trillions – it means nothing to most people.

    Talk about debt in terms that people will understand and then the Conservative Party can hammer some more nails into the Labour coffin.

    • alan jutson
      Posted February 19, 2010 at 6:49 pm | Permalink

      Letters from a Tory

      The first thing to do is put it in actual Numbers instead of words.

      A whole series of noughts look much bigger than 1 billion which few can grasp.

      Billion, Trillion does not sound much difference, until you look at the noughts.

  11. Andy Hoff
    Posted February 19, 2010 at 10:36 am | Permalink

    Has anybody noticed that China and Japan have started to cut their purchases and holdings of the US dollar? They are getting nervous about US debt so what chance has the £ with Gorgeous Gordon in charge. Foreign investors have a very jaundiced view of the UK already and the bond market has only been kept alive by Bank of England funny money. The reckoning approaches- "Beware the Ides of March".

  12. Matt
    Posted February 19, 2010 at 10:55 am | Permalink

    There’s always the unexpected.

    It might not take much to unsettle the markets, maybe a narrowing of the polls putting Labour in with a possibility of surviving the election and maybe governing with the Liberal Democrats.

    Maybe it just happens without a noticeable trigger, but a sterling crisis could happen overnight.

    (Funny how a sudden big depreciation in currency is alarming but a big depreciation over a few months receives so little attention.)

    If this happens then maybe they should poll the 60 economists again.

  13. Norman
    Posted February 19, 2010 at 10:59 am | Permalink

    I can't fathom why these academics are insisting that increasing public debt to fund the public sector is a good thing. One I heard talking this morning (a Professor from the University of Warwick, one of the signees) basically came out and said that this recession was the fault of the private sector and it was now up to the public sector to get us out of it. A professor of economics!

    Why not take this argument to the logical conclusion: subsidising government jobs is better than being on the dole and helps recovery rather than hinder it. Therefore why not raise the dole to be the same as someone in work? Surely the boost to the economy would be massive if the axiom this theory is built on holds water. Although we can't pay people for doing nothing so we'll make up non-jobs but because some will be in non-jobs and some in necessary front line jobs so as not to discriminate we should pay everyone the same.

    Oh, wait, this was already tried and ultimately failed as it tried to keep up with real economic policies in the 1980's.

    Welcome to the socialist paradise.

    • Doppelganger
      Posted February 19, 2010 at 11:18 am | Permalink

      Well it was private banks that went bust, wasn't it. They may have been poorly regulated and the government itself may have borrowed and spent too much but the banks cannot be let of the hook. They chose to stick their hands in the fire.

      • Jonathan
        Posted February 19, 2010 at 12:19 pm | Permalink

        And it was Brown that decided to use our money to bail them out. Who else would write a blank cheque to unknown debts? Only a fool.

        The deposits should have been predicted and the banks allowed to be sold off or raise money themselves.

      • Sally C.
        Posted February 19, 2010 at 2:10 pm | Permalink

        In theory, they were private banks, in practice the government, by deciding to nationalise them, made us see them for what they really are – extensions of the state. Hence the fury over huge paypackets. As I have said before, we are still potentially on the hook to bail out Barclays, even though they would claim that they are a private bank.
        The banks clearly did overextend themselves and do bear a lot of responsibility, but how did they get so out of control?
        I would argue that the Bank of England, by intervening in the open market to keep base rate artificially low from 2001 onwards, thereby provided the banks with the extra reserves they needed to go out and lend credit (as a multiple of those extra reserves) on a vast scale. The results can be seen everywhere, from Alexander McQueen's suicide to Readers Digest going bust. People and companies ended up taking on too much debt and the housing market soared. The FSA did not act to restrain bank leverage and as Northern Rock and Bradford and Bingley, in particular, relied too heavily on the wholesale money markets for funding and not their traditional deposit base they were totally exposed when funding from the wholesale money markets suddenly dried up in August/September 2007. The rest, as they say, is history.

        • Doppelganger
          Posted February 19, 2010 at 3:45 pm | Permalink

          My feelings entirely Sally. Even back in the 90s banks were beginning to push their luck with derivatives. Peple don't understand what banks do, the credit creation process and the distinction between raising and managing equity. I have always been an ardent capitalist but that there is a difference between liberty and licence.

        • brian kelly
          Posted February 19, 2010 at 9:52 pm | Permalink

          Let's not forget, also, that Brown believed that endless dirt cheap imports from India and China [particularly] would keep inflation low in this country [hence boom and bust abolished], as did the USA. It seemed like dream come true. What fools. Greenspan [Brown's guru who, Brown boasted, would sit at his side as advisor] apologised for his mistake and foolishness. Has anybody heard anything from Brown in similar context? No! and you're not likely to.

    • Stuart Fairney
      Posted February 19, 2010 at 11:35 am | Permalink

      "I can’t fathom why these academics are insisting that increasing public debt to fund the public sector is a good thing. One I heard talking this morning (a Professor from the University of Warwick, one of the signees"

      Perhaps the answer is on the question? He works in the public sector does he not?

  14. Collis Gretton
    Posted February 19, 2010 at 11:54 am | Permalink

    "60 economists can be wrong."

    Yes, and so too can John Redwood. Which is more likely?

    Reply: Who has been right so far about the banking crash, the recession and the state of the public finances?

  15. Olaf
    Posted February 19, 2010 at 12:40 pm | Permalink

    Most sensible government departments and local authorities are already preparing for cuts of 10-20% in their budgets. The next government may find that the public expenditure reduces without actually having to do very much.

  16. Denis Cooper
    Posted February 19, 2010 at 1:18 pm | Permalink

    Looking on the bright side: the Bank of England used £198 billion of newly created money to buy up previously issued gilts from private investors, which gilts it now owns and can keep out of circulation for as long as necessary, while the Treasury got its hands on almost all of that money by selling about the same volume of new gilts to largely the same private investors, which money it has been using to help pay its bills; but as the Bank of England is publicly owned and a kind of captive lender it could be induced to accept repayment of the capital and interest on the gilts its now owns with more gilts, rather than with money, while the Treasury gave priority to repaying the private lenders with money.

    Looking on the dark side: obviously it wouldn't be possible for the Bank to carry on creating vast sums of new money indefinitely without causing hyperinflation, and now that it has stopped doing so (for the present) the Treasury must try to carry on selling huge volumes of new gilts to private investors over the coming years without the Bank propping up (rigging) the gilts market by buying up previously issued gilts at about the same rate; plus eventually both the private lenders and the Bank will have to be repaid, and repaid with money taken from taxpayers.

    • waramess
      Posted February 19, 2010 at 4:54 pm | Permalink

      I'm afraid I cannot see the bright side. There is absolutely no difference betweeen the process of QE and simply printing the stuff and using it to satisfy current government spending plans.

      The effect is to increase the money supply and devalue the existing stock of money in circulation.

      The governments argument that they are spending money that the private sector have decided not to spend by virtue of reducing the velocity of circulation is just a Keynesian nonsense.

      The fact is they have issued counterfeit money, will be unable to reverse the process when they want to and it will be to the detriment of the average person in this country.

      On the other hand, I do see the dark side…

      • Denis Cooper
        Posted February 19, 2010 at 7:57 pm | Permalink

        The bright side is that government is no more in hock to private investors now than it was a year ago, give or take a few billion.

        Although of course its total indebtness has greatly increased, by about £200 billion, virtually all of that additional debt is owed to the Bank of England rather than to private investors.

        When the Bank reports that it now holds a £198 billion stock of gilts:
        http://www.bankofengland.co.uk/markets/apf/result

        that is debt owed by one part of the state, the Treasury, to another part of the state, the Bank.

        The private investors are the big worry because they're free to decide whether they'll allow the government to roll over its debts until it's in a better position to pay, but there's no doubt that if necessary the Bank will be willing to do that with its £198 billion stock of gilts.

        It amazes me that nearly a year after the start of quantitative easing most journalists are still helping the government to mislead the public by repeating vague descriptions like "pumping extra money into the economy", when it quickly became clear that 98% of the new money was just being passed indirectly from the Bank to the Treasury so that the government could continue to pay its bills.

  17. GJ Wyatt
    Posted February 19, 2010 at 1:38 pm | Permalink

    Like flowers in spring these displays of groupthink from the luminaries of comics departments across the country surely herald a turning point in our economic fortunes. Do they congregate for safety in numbers behind their noble lordships like sardines in a shoal, or to hunt in packs like Basset hounds? When the word list of signatories approaches or exceeds that of the content of their letters, one suspects that content to be in need of some forensic examination. The imagery in the FT letters is noteworthy. The one from the nine headed by Lord Layard, has overtones of coitus interruptus (“ History is littered with examples of premature withdrawal …”) while that from the fifty eight headed by Lord Skidelsky talks of “the economy falling off a cliff” like the proverbial lemmings. Neither of those letters makes any reference to earlier government measures which might have provoked or incubated the crisis.

    • hatfield girl
      Posted February 19, 2010 at 7:05 pm | Permalink

      So pleased you noticed the imagery too. Layard (Eton and King's) had a psychoanalyst father, which might have influenced imaging. The language used by Brown is noteworthy too – Tories 'kicking away ladders' from under the many, Tory 'hatred' for ordinary people, etc.

      Skidelsky and his larger numbers just seem to be troubled by reality – the economy has fallen off a cliff and is now pedalling air before the gravity of its situation asserts itself.

      Quite a few of the signatories are either emeritus, former, or not economists at all. All but one are or were academics;many have academic parents. Perhaps there should be a toast by the signatories and the man they seek to support:

      'Absent fathers!'

      • GJ Wyatt
        Posted February 20, 2010 at 11:23 am | Permalink

        There are many of the "usual suspects" among them, who have nailed their colours to the Labour mast before. Indeed I'm fairly sure that several of them signed the infamous "364 economists" round-robin coordinated by Hahn and Nield against Thatcher/Howe in March 1981. Of course they are not the type who would "learn the lessons" of that egregious mistake. After all their role is to profess, not confess.

  18. John Broughton
    Posted February 19, 2010 at 2:21 pm | Permalink

    And Gordon Brown's response – "put up taxes."

    The man is (he always was) an economic illiterate. The only time he got it right was when he followed KC's spending programme and goodness knows I hate to give KC and his weird EU views praise.

  19. Freeborn John
    Posted February 19, 2010 at 2:24 pm | Permalink

    It reminds me of the climate change scientists. Scientists and economists need to keep at arms distance from politics if they are to retain credibility. Even if they happen to support the policies of one party or another at a particular moment in time, they devalue the impartiality they need in order to come up with worthwhile results if they allow their names to be used as a means to a political end.

    The political parties should however be using science or economics to justify their policies, without wheeling in the scientists or economists who produced the results.

  20. Michael Lewis
    Posted February 19, 2010 at 2:26 pm | Permalink

    Not read the names of the 60.

    I'm assuming Dan "Danny" B is on the list.

    The sorry state of Sterling tells the true story. Any reasonable person knows – you can't live beyond your means indefinitely.

  21. Grumpy Optimist
    Posted February 19, 2010 at 2:32 pm | Permalink

    I must admit to being very relieved to discover that 60 economists have gone public as they have.

    I hate to be on the same side as the majority – in anything really but certainly of economists. When I read the 20 economists in the Sunday Times, agreeing with my view, I thought for a moment that I must be wrong. Now I can rest easy.

  22. gac
    Posted February 19, 2010 at 3:02 pm | Permalink

    I am probably an idiot (but NOT an Academic) but it is a case of commonsense! Surely?

    The BofE is printing money which is being used to increase the balance sheet capital of the banks but more relevantly to loan to the Government.

    The Government is using this borrowing to continue the hyper spending on the Public Sector.

    There is not enough money left in the sytem to re-energise the Private Sector which needs to make and sell in order to provide real growth.

    The guy from Warwick (I think it was him) said that Brown should continue to fund the Public Sector (= wages etc) which would then start to buy things and kickstart the economy.

    We are not making the things that people want to buy.

    I usually rely on Anatole to advise me and then think the opposite but as he did not appear to write in The Times today I am perplexed as to how this would work.

  23. Robert McDowell
    Posted February 19, 2010 at 3:30 pm | Permalink

    Dear Mr Redwood,
    You are surely wrong to say that debt interest is higher despite buying in £198bn of gilts when you consider how much of that is now payable internally between arms of government. It is also wrong to believe yields are higher (i.e. lower prices) since we have not yet seen the full effect of massive regulatory requirements upon and demand by banks and others to buy gilts to shore up the solvency quality of their reserves and investments. Forgive me if I'm wrong to think you, Osborne and colleagues are playing politics here in pushing the idea of publi finances in disarray when it should be glaringly obvious that private sector indebtedness grew massively in the lead up to the credit crunch and ubsequent recession in years when the public sector's finances remined stable.
    That said, even though my professional opinion is that you are quite wrong and I agree with the 60 economists, at the same time the kicking your party and the media are delivering to Labour is poetic revenge for the same wholly unreasonable, unrealistic and unfair kicking New Labour gave your government in the 1997 general election claiming public finances were imprudently in a mess, when they palpably were not!

    Reply: Never have we been in such debt, and never has it grown at such a pace. I am afraid you are whistling in the dark, thinking there is no problem. Have you seen gilt prices and the pound today?

  24. Ross J Warren
    Posted February 19, 2010 at 3:42 pm | Permalink

    The fact that we have to borrow money in January should set the alarm bells ringing. January is normally a pretty good month for tax receipts after the Christmas and January sales splurge, so why did the government need to borrow? Well the simple truth is that we could not meet our minimum payments. Now if that happened to me, I would know I was in big trouble, but then I am a sensible sort. I would not apply for another Credit Card to borrow more cash to pay the shortfall, that would be insanity but that is exactly what our government is now doing.
    Of course our Government cannot default on its debt payment, anymore than you or I can. To do so would would result in the equivalent of credit black listing. There is only one way out for UK plc and that is through growth, so although I am in favour of us reducing government debt from day one of a Conservative government I do recognise that this must been done in a sensible and measured manner. I recall that we, the hard pressed tax payer lent the banks a considerable amount of money, when can we expect to see some of the promised profit on this loan? We are certainly in a difficult situation and so it doesn't surprise me that there are different viewpoints being expressed as to how we get out of the mess. I believe that George should have an emergency budget as soon as possible after the GE and that he should start the process of cuts immediately, even if it is by a relatively small amount. The longer the cuts are put off the more we will have to find in interest payments.

    • alan jutson
      Posted February 19, 2010 at 7:01 pm | Permalink

      Ross J Warren

      You are of course assuming that there will be a Conservative Government.

      I hope you are right, but things are not looking too good at the moment with only a 10% lead.

      If DC cannot win given the staggering mess we are in, what hope is there for him, us and the Conservatives for the next 5 years.

      Cabn you imagine what state we will be in after another 5 years of Gordon.

      • Ross J Warren
        Posted February 20, 2010 at 5:47 pm | Permalink

        Your right to be concerned, all the more reason to make every effort to get D.C. and team elected. I do worry about the prospect of a further five years of Labour and even the prospect of a hung parliament is far from promising. We are currently scraping along at what we all hope is the bottom of the recession, and Labours tactic of claiming we would cut to hard to soon is gaining some traction. The debt figures are so large it is hardly surprising if many members of the public do not grasp how serious they really are. At least if we get in you can be certain that we will do our best to trim the deficit, with NU-Labour it is quite possible that they will simple continue to overspend until we reach a point where the markets simple give up on UK plc.

        • alan jutson
          Posted February 21, 2010 at 12:15 pm | Permalink

          Ross J Warren

          Not sure if you read the Mail on Sunday, but a very, very good editorial by Sir John Major today, which should be compulsive reading. It sums up exactly the situation of the past 13 years of Labour Government, and how they have destroyed not only this Country, its wealth, its world standing, but the belief people have in politicians in general.

          Shame that the present Conservative front bench cannot seem to grasp how to put this across.

          I fear David Cameron is losing the plot, and at the same time the Conservative lead in the polls.

          At the moment the Conservative Party does not seem to have a cohesive strategy, or a relevent set of policies that are meaningful in any way to the general public.

          They are even failing in the basics (other than on this site) in so far as they are failing to expose and attack the gross failure of this incompetent Labour Government.

          Its not only worrying, but deeply depressing for the future.

  25. Brian Tomkinson
    Posted February 19, 2010 at 4:53 pm | Permalink

    Time to bring in the IMF?

  26. Mark
    Posted February 19, 2010 at 5:21 pm | Permalink

    After the news of the letter from the 20 economists, I had visions of the editorial office in the FT:

    "Round up the usual suspects"

    And suspects they are – several of them complicit in Brown's economic disaster as ex MPC members, desperate to disguise their role in our problems.

    • Mark
      Posted February 19, 2010 at 5:57 pm | Permalink

      Footnote: I see one of the suspects responsible for slack money is to retire from the MPC on May 31st. I hope Kate Barker retires from public life entirely – her infamous Housing Review provided the prop for inflating the country's mortgage debts to their present ridiculous heights.

  27. Edward
    Posted February 19, 2010 at 6:31 pm | Permalink

    Is there a way of finding out who the Sixty are, without having to buy the dreaded Corporatist Times?

  28. Johnny Williams
    Posted February 19, 2010 at 7:01 pm | Permalink

    It shows that our Universities have been breeding far too many "Left Leaning Graduates" over the past thirty years and they have never experienced hardship or real crisis.

    Well its on its way..

    I predict that the pound will be under major pressure from now on until the Euro question and the Greek debt problem is either resolved or breaks out, taking the UK in contageon.

    We MUST cut pur Public Debt involving thousands of Town Hall and Quango civil servants with gold plated pensions and salaries over £100,000 per year. We will get at these salary numbers soon, then there will be Public Uproar as big as that for MPs expenses. Our rates now taken for hugely over priced houses is the expenditure which is now so unfair. Our money is being legally stolen by Town Halls.

  29. Chris
    Posted February 19, 2010 at 7:40 pm | Permalink

    To help ease the impact of cuts there should be immediate cuts which have high symbolic value as well as practical value – the quangos should be decimated, and all those left put on notice. Defra apparently has 68 quangos but far from helping farming they have diverted desperately needed funds into the bottomless pit of bureaucracy, with endless meetings and consultations, which simply generate more meetings and paperwork, and some incomprehensible jargon. What is needed is to pare everything down to the basics – a small committed group, with common sense and the relevant practical expertise in the subject being addressed. The top down approach has failed spectacularly, as illustrated by a government which is so out of touch with the rural community and how farming actually works. Farmers do not want expensive literature produced telling them about "the basket of indicators" nor how Defra is working to "turn its respect dials to positive"

  30. mikestallard
    Posted February 19, 2010 at 9:02 pm | Permalink

    I simply want to congratulate and thank you for steering me through this crisis – even though, as you say, it is a very slow crisis. You have not put a foot wrong, although many commentators (including me) have been all over the place over the past eighteen months.
    And you have described it in fine detail so that both professionals and ordinary people like me have understood where you are coming from clearly and simply.
    Well done indeed.

  31. brian kelly
    Posted February 19, 2010 at 9:05 pm | Permalink

    There are two months to the end of the financial year and, so far, we have borrowed £B122. Most forecasters say we will exceed the Chancellor's borrowing figure of £B178 for the full year. Can anyone explain why they would forecast that?

  32. Dorothy Wilson
    Posted February 19, 2010 at 9:27 pm | Permalink

    Perhaps we should ignore all the economists and return to the wisdom of Mr Micawber. Only joking of course!

  33. Roger
    Posted February 20, 2010 at 5:00 pm | Permalink

    Its like managing your own finances. If you build up a debt, its your responsibility and sensible people aim to pay it off as quickly as they can. Its a scandal that the debt is so high. in good times prudent people save and dont spend,spend,spend. Lets look to pay this debt back and get on an even keel.

  34. Bohnert1983
    Posted March 7, 2010 at 8:34 am | Permalink

    Very good, I really enjoyed it. Do you know of somewhere I can check out more about it?

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  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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