Wednesday, May 05, 2010

EC warns Britain of its public debt

Well you'd wonder why the European Commission is saying that the UK's budget deficit will be the highest in Europe, at over 12% of GDP.

The Daily Telegraph reports:

"The first thing a new government has got to do is to agree a convincing and detailed programme of debt consolidation," Olli Rehn, the EU's economic and monetary affairs commissioner said.

"It is by far the foremost challenge for a new government. I trust that whatever the colour of the government it will do this."

All of the main parties are continuing to evade this. Gordon Brown apparently believes that spending can't be cut this year, because it will threaten the recovery because it pulls money out of the economy, although with the same breath he is INCREASING taxes (because that pulls money out of the economy, for him to spend).

So figure out for yourself how the government spending less is bad for the economy, but the government taking more out of the economy in taxes is good for it, unless you have the ideological belief that government spending is always better than private spending.

Quite why anyone can give this man any credibility on the British economy is beyond belief.

Add that to the odd claim by Gordon Brown last week that "Labour has built schools, hospitals and roads, so there is no need to continue with more capital spending", when most of those who (incorrectly) argue for pump priming recession filled economies with state spending say it should go on capital items LIKE roads which generate net economic benefits.

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