By George, they’ve beaten the odds. This might be the most idiotic Government since Churchill put us back on gold at prewar parity. Via Krugthulu, Schularick and Taylor have an on the post crisis performance of US and UK economy. Below is the money shot.
You can see that both the US and UK suffered much worse recessions than normal, considering historical experience (and educated guess work). However, while the US is recovering from that recession more quickly than expected, the UK is recovering much more slowly. So slowly in fact, recovery is a misnomer. We are stagnating.
The only organisation, as far as I’m concerned, with the power to move that bottom blue line upwards is the Bank of England. Although operationally independent the Chancellor has the authority to instruct the Bank of England to be more vigorous at any time he likes by changing the definition of the “price stability” which he is meant to achieve.
New Labour initially had the Bank of England target RPIX of 2.5%, but in December 2003, the inflation target was changed to CPI of 2%. Were Osborne to decide to that price stability in fact meant nominal GDP targeting and that some catch up was necessary he could make this instruction without further ado. Osborne has not made this decision despite definitely receiving advice from Vince Cable’s office that it would be a good idea to do so. I don’t have any evidence he’s received advice, but knowing Vince and his SpAd the advice must have been proffered at some point.
It is within his remit within current legislation. It doesn’t matter that it is a fudge. Britain has always fudged crisis management, think of it a 21st century suspension of the Bank Act, British politics is good at muddling through. When it comes to childcare the coalition is adept at misdirection and fraud, when it comes to the disabled, they aren’t afraid to hurt people, but when it comes to the macroeconomy they seem to accept failure gleefully. Given the coalition’s incompetence in managing the affairs of the nation, they need kicking out.