So how much we spend on supporting the economy in 2010 and 2011 is almost irrelevant to the fundamental budget picture. Why, then, are Very Serious People demanding immediate fiscal austerity?
The answer is, to reassure the markets — because the markets supposedly won’t believe in the willingness of governments to engage in long-run fiscal reform unless they inflict pointless pain right now. To repeat: the whole argument rests on the presumption that markets will turn on us unless we demonstrate a willingness to suffer, even though that suffering serves no purpose.
Quite. David Cameron is a charlatan. The public finances are “worse than we expected” he said in Milton Keynes today. Well that’s nonsense.
Interest rates have gone down since things began to go tits up in Europe. The deficit last year was smaller than predicted which gives us more leeway this year.
Things are better than expected! When even the Telegraph thinks you’re wrong, you have a problem Mr Cameron.