The Great Debate UK
-Tony Cleaver is senior teaching fellow in Economics and Finance in the Durham University School of Economics, Finance and Business. The opinions expressed are his own.-
George Osborne is taking a risk.
The Chancellor is also placing himself firmly in the orthodox school of financiers who assert that governments must balance their own books even in times of recession.
The Chancellor’s action to add to the squeeze on public finances already started by his predecessor (aiming to raise 40 billion pounds to the 73 billion pounds already provided for by former Chancellor Alastair Darling) and to reduce government borrowing down from over 10 percent of GDP to close to 1.1 percent in the space of five years implies kicking away the support of the UK economy that the country has desperately needed.
It is worth remembering that substantial government spending was called for after the 2008 credit crunch caused a collapse in the private sector that was at the time threatening a 1930s-like slump.