The Great Debate UK
-Richard Wellings is deputy editorial director at the Institute of Economic Affairs and editor of the IEA blog. The opinions expressed are his own.-
If the Conservatives are elected, as the polls currently predict, they will have to tackle the worst fiscal crisis in peacetime history.
At current spending levels, the government will have to raise around 200 billion pounds a year to fund a huge deficit that has spiralled out of control. Such high levels of borrowing will starve the private sector of investment.
There is also a real danger that the markets will eventually refuse to lend money in the absence of a realistic programme to pay off the debts. At the very least, investors in gilts may demand a larger risk premium. This would mean higher interest rates which would raise the cost of financing the debt, risking a debt spiral.
- John Kampfner is chief executive of Index on Censorship and former editor of the New Statesman. His new book, “Freedom for Sale”, will be published by Simon and Schuster in September. The opinions expressed are his own. -
The news could not have come at a worse time for free speech campaigners. Revelations that private detectives have been paid large sums by the tabloid press to hack into the mobile phones and other records of public figures will cause damage to the newspaper at the heart of the practice, the “News of the World”.
(UPDATED Dec 18 – This post is now closed for questions)
Conservative Party leader David Cameron will be speaking on the economy and the credit crunch at Thomson Reuters’ Canary Wharf office on Monday, followed by a question and answer session.
The Tory leader has argued that two main problems face Britain at present – a recession coupled with a record level of government debt, and that the government is trying to tackle one while ignoring the other.
from UK News:
David Cameron's decision to ditch a major Conservative pledge to match Labour spending plans pound for pound was hailed by commentators as an important step in the politics of the recession, opening up a clear gulf between the two main parties' economic policies but exposing the Tories to considerable risk.
Labour is expected to cut taxes, accelerate public spending and announce more borrowing in Monday's pre-budget report. Now their supporters can revive the spectre of "Tory cuts" to funding for schools and hospitals which helped the Conservatives lose the last two elections.
from UK News:
Prime Minister Gordon Brown has suggested he will push expansionary fiscal policies to help boost the economy. Brown's comments were the latest in a series from him and Chancellor Alistair Darling stressing the importance of boosting the economy, which shrank in the third quarter of 2008 for the first time in 16 years and is expected to contract more sharply next year.
Bank of England Governor Mervyn King has also put his weight behind "some fiscal stimulus", just as the Bank predicted in its quarterly inflation report that the economy would shrink sharply next year.