Insights from the UK and beyond
Another bumper Budget?
All we’ve heard for the past few weeks is how little room there is for Labour to pump more money into the economy to fight the recession.
The increasingly popular — and confident — opposition Conservatives have gained ground by blaming Prime Minister Gordon Brown for turning the public purse into a public hearse.
But there are a few reasons to suspect that when finance minister Alistair Darling steps up to the dispatch box tomorrow, he will deliver another blockbuster life-support package.
Yes, there are inklings of a recovery out there — some experts say we have reached the bottom — but Labour has to make sure this recession is long gone before it can hope to win an election.
And it only has until mid-2010 to wait before that day of reckoning must come.
Brown might be willing to chance his arm with some big spending to reassure the public that job losses will be kept to a minimum and that Labour cares more about ordinary peoples’ lives in the here and now than it does about the budget deficit and government debt markets.
If this is the worst economic crisis for decades, then there is no easy way out of it and the best thing to do is to take whatever action is necessary to bring it to an end and worry about the consequences later.
Respected think tank the National Institute of Economic and Social Research has called for a temporary 30 billion pound stimulus aimed at stuffing employers and employees coffers with
They say the level of government debt is nowhere near where it was at the end of the Second World War and so there is no real panic about getting it back under control eventually. Yes, it may mean higher taxes and less public spending in the future, but that might be a fair price to pay to avoid mass unemployment and social unrest.
All the indications are that Labour won’t risk the ire of experts and opposition alike with another big stimulus, but the truth is they won’t get a second chance to reduce the severity of the downturn.
Besides all that, something interesting was happening in Westminster on Tuesday.
Rather than hounding the Prime Minister’s office with questions about the Budget, Britain’s press pack were jumping all over an emergency announcement on how rules governing the much-maligned MPs expenses system might be changed.
It wouldn’t be the first time that Brown has put up a smoke screen before delivering a knockout, headline-grabbing blow.
Bumper budgets are a tried and tested vote winner … but that might also be just what the economy needs.