There are suggestions in some places that now the economy is beginning to grow at a faster pace and confidence is picking up, we can somehow go easier on getting the budget deficit down. This would be a mistake.
Faster growth in the economy will accelerate the reduction in the deficit anyway because the economy will generate more tax revenue, and fewer people will be out of work claiming benefits. This effect will however be dampened where tax rates are not optimising revenue, and where many people coming into jobs from unemployment still receive substantial top up benefits in work.
An improving economy makes it easier to look for improvements to public service delivery at lower cost, as people know there are jobs available in the private sector where the public sector can no longer carry on recruiting as better ways of doing things are brought in.
The Conservative critique of Mr Brown’s approach in 2007 was correct. Near the top of the boom all state borrowing should have stopped. Today as we climb out of the Brown slump, we should continue to throttle back on state borrowing.
One way we need to examine is the issue of helping more people who live in the UK to take on the many new jobs that are becoming available. The government is seeking new powers to stop exploitation of labour coming in from abroad, and is wanting to limit benefit entitlement for EU migrants. More work on this will require a renegotiation of our relationship with the EU, but in the meantime when this Parliament has no majority for such action the government will see how far it can go within the current EU legal framework.