The last government’s recipe for recovery was wrong. It combined excess public spending and borrowing with monetary tightness for everyone else.
The new government needs to change this formula – we need better controlled public borrowing combined with easier money to allow a private sector recovery. The latest money supply figures show money is still too tight. Business surveys show too many firms still cannot get credit, and those who can are paying more than 5% for the money they do borrow.
We need to change bank regulation and monetary policy urgently. The government has started to move on excessive puiblic borrowing. It also needs to move on the feeble private sector recovery, which is the result of current money policies.