Britain’s budget proposals: A rollercoaster ride

Posted: March 19, 2015 in economy
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IN THIS week's print edition, we take a look at the latest budget, delivered yesterday by George Osborne, the Conservative chancellor of the exchequer. We called his plans for a rollercoaster of spending cuts until 2018, followed by a splurge, "a strange mix of prudence and lunacy". The inconsistency of the budget proposals can partly be explained by Mr Osborne's need to play politics. Although "Mr Osborne’s performance was monstrously political," we say, it is "also quite likely to improve the Tories’ prospects". The next day, the Liberal Democrats outlined their own fiscal proposals, which called for an even steeper rollercoaster of public spending (see chart).

But if the government's future proposals are a rollercoaster ride of spending, economists say that the past few years have also followed a similar course. Initially,&nbsp;Mr Osborne set out on a course of fast-paced austerity designed to eliminate the structural deficit by 2015. But the crisis in the euro zone and a British economic slump led the chancellor to toss out that plan. Slowing down his plans for fiscal adjustment, along with monetary stimulus in the form of funding for lending by the Bank of England, were the policies that underpinned the economic boom that has taken hold since 2013.Yet this rollercoaster ride may not have simply been due to yo-yo austerity or Europe's economic problems. As we …<div class="og_rss_groups"></div>

via Economic Crisis


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