@matt

Head out of proverbial, foxy (if not stuck) ....

I think its dugusting the amount of borrowing Osborne is doing. Keep it up pointing it out. As a country we need to try a lot harder to mend imbalanced public and private sectors which means reducing the public sector. If we dont, it will strangle the economy in the long term -- the problems we see now stem back 10 years.

Labours deficit reduction plan is to borrow £250BN more than the coallition. Or translated it means another squandered £250Bn where the agenda is to get power rather than the national interest.

BTW. It adds to the £350BN Labour stacked on top of the national debt before 2008 when the economy was inflating - its anti Keynes. Wonder why they did it because the kids then are not benefiting from it now.

Tony Blair agrees - he says Labour should not have borrowed so much. Lesson learned.

& who do you blame for this situation Mr Blanchflower?

the UK relies on its credit rating to sustain the borrowing levels exaserbated by the last Government, we have came out of this financial crisis in reasonable shape compared to how much worse it could have been had we not made cuts and lost the confidence of lenders worldwide.

Some carefully selectivly chosen recent stats does not change that.

How much more money do people need?

Define depression Blanchy...
One holiday not two per year ?
One car per household not two ?
A television in every other room not every ?
One mobile phone per person not two ?...
Truth is most people are simply greedy.
Now, if you want to settle for less - go on the scrounge - that way you have the perfect excuse to just say no !

The MPC is currently balanced between "AD is just right" and "AD is too high", with only Posen calling that "AD is too low".

If the government tries a fiscal stimulus to boost AD further, how would this move the MPC? Would they suddenly agree that Posen was right after all?

The more likely outcome is surely that they would tighten MP to maintain the current growth rate of AD, and offset the fiscal stimulus. Fiscal "austerity" is the only "excuse" for loose MP at the moment.

The problem we have is the split between nominal growth and real growth. Would more fiscal stimulus and less monetary stimulus give us better productivity gains, somehow? It seems unlikely.

Why? Before 2008, the last government borrowed £350BN

Ditto :)

I think i can clear the Uk deficit as i am getting a £1 everytime you post this :)

@mcquade

Raymond is right (check your data).

Between 2000 and 2008 UK industry contracted at its fastest rate since the 1970's.

At the same time, 1 million public sector jobs were created by borrowing.

I'm glad the agenda has moved on to political corruption.

@Hal
There was no genuine growth in the economy after 2001. The boom was financed entirely by borrowing.

The GDP 'Change from Peak' chart is misleading because GDP is measured signicantly differently to the way it was measured during prior crisis (just having nominal GDP - inflation = real GDP should tell you enough).

A great depression with 8% unemployment? Come on, is this a comedy column?

While many think that the world revolves around what Murdoch "allegedly" did with the phone hacking scandal, keep this in mind.

In two weeks, the States will default. Already Moody's, S&P and other rating agencies want to lower their rating. Many bond holders are legally obligated to dump these and take the loss if necessary.

This means that this will affect the U.K. as well (everything from interest rates and unemployment to possible bank closures). The total amount of toxic debt will never be able to be totally paid off (despite what Osborne, various economists and the BBC tell you).

This means that NO ONE is immune from defaults, riots and more. I know that hype about the rich and powerful, hacking and which celebrity is sleeping with who is way more exciting. However, as the Stateside politicians continue to waste time, watch more stuff fall apart.

The government should encourage the banks to offer all current mortgage holders at least 5 and maybe 10 year fixed mortgages on their properties - without rexamining the lending criteria.This would remove the fear that many people have they may lose their house when interest rates rise - and allow homeowners to spend with confidence - boosting the economy.

Mr Danger
The problem is that may well not be over by a long way. So the government is firing people and output over the last months has been zero and is projected to be 0.1% for a nine month period. It doesn't take a shuttle astronaut to work out where unemployment is headed.

@David Blanchflower

Rebase the x-axis so the zero point is 12 months on from the start of recession and the UK economy looks to be doing well. Rebase 12 months earlier and the UK economy looks much worse.

Basically, rebasing the x-axis away from the last government and the siutation improves dramatically.

Why? Before 2008, the last government borrowed £350BN and inflated the economy when it did not need it. It was done for political and not sound economic reasons.

The current UK fiscal tightening is painfull and has accelerated the envitable decline in living standards. But getting the unavoidable pain over and done with quickly means we can move on.

The alternative simplicistic fiscal expansion is flawed:

1) the vast majority of government expenditure has negative payback/ NPV. The value of the national asset is consumed and not replaced and wealth leaks e.g. china imports and negative balance of payments

2) borrowed money needs to be paid back over time. Until the last government, the UK had a proud record of managing its national debt.

3) government spending reallocates resources out of the productive into the public sector. It inflates wages and asset prices and makes the economy uncompetitive.

4) Even if fiscal expansion was NPV neutral and a zero sum game on a world level, if the UK did not behave selfishly then it would loose out - we would borrow British people's money to support wealth create in other economies. UK borrowing is not a solution that will work - you could ask the Chinese to borrow and spend.

Lets not confuse the weak fiscal control with an economy with a small planned state sector which makes strategic long term positive return investments to grow UK industry e.g. in manufacturing of wind turbines or precision steel production. Unfortunately these investments do not yield short term votes even if they create long term jobs.

Citigroup are predicting that the economy will contract by 0.2% in Q2.

The transport secretary Philip Hammond, is trying to prepare the country for bad economic news. He talked about a rocky road ahead, not just for this year but next.

Some economic forecasters are talking of 1% economic growth for next year.

I appreciate Indu Pendent is relaxed with all the money Osborne is borrowing, but if we fail to meet the forecasted economic growth, it means more tax rises, more spending cuts and more borrowings.