Whisper it, but Osborne has embraced Keynesianism

The Chancellor has accepted the need for the state to underwrite investment.

The announcement by George Osborne that the government will underwrite £50bn of infrastructure investment is a belated admission that, in times of recession, the state must intervene to stimulate growth. The delusion that the coalition's spending cuts would increase consumer confidence and produce a self-sustaining private-sector-led recovery has been abandoned after Osborne's "expansionary fiscal contraction" turned out to be, well, contractionary. Whisper it, but Keynesianism is back. 

Since the decision to guarantee loans will not, in theory at least, require the government to spend a penny more, Osborne will insist that this is not "plan B" or anything like it. As his sidekick, Danny Alexander, puts it, "This is not a direct call on the taxpayer. That would only happen if something went wrong with a project." And after the private sector's sterling performance over the last month, why should we doubt him?

But even if we assume that the taxpayer won't be forced to pick up the tab for any of the projects (the FT cites "the Thames tunnel, the Mersey Gateway toll bridge and the A14 road widening in Cambridge" as examples of those that might benefit), this remains a significant U-turn by Osborne. As the excellent Jonathan Portes points out on his blog, from an economic perspective, the difference between the government "borrowing from the private sector to finance investment spending, and the government guaranteeing the borrrowing of another entity" is is largely irrelevant. The Chancellor has accepted the need for counter-cyclical spending to boost aggregate demand - the essence of Keynesianism.

Now Osborne has performed a small U-turn he will find it harder to avoid a bigger one. The belief that, in times of recession, the state can and should stimulate growth through temporary tax cuts and infrastructure spending is based on decades of economic research. Once you accept this, it is hard to be a little heretical.

Since Osborne is so fond of boasting of the UK's "safe haven" status, the least he could do is take advantage of it. He should use the country's historically low bond yields to borrow to stimulate growth through higher infrastructure spending (the most effective stimulus, according to the Office for Budget Responsibility) and tax cuts.  As the Nobel Prize-winning economist Christopher Pissarides argued in our "Plan B" special issue last October, "a small rise in gilt interest rates is a small price to pay for more jobs".

The Chancellor has finally accepted that there is an alternative to permanent stagnation (or worse). Now he needs the policies to match.

Chancellor George Osborne plans to guarantee up to £40bn of "nearly ready" infrastructure projects. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Brexit campaign publishes private phone numbers of Eurosceptic rivals

Leave.EU hate the EU and hate Vote Leave who also hate the EU. What could go wrong?

Remember Leave.EU? Not to be confused with Vote Leave, which is the pro-Brexit group led by one of the former mayors with Hitler tourettes, or with Grassroots Out, which was the group with the neon green ties, or with UKIP. Even though Grassroots Out, UKIP and Leave.EU are all funded by Arron Banks, a multi-millionaire with interests in the British Virgin Islands who lives in a mansion once owned by the prog rock musician Mike Oldfield. Glad that’s all clear.

Anyway, Leave.EU still exists, even after Vote Leave was designated as the official Leave campaign – spending more of its time attacking the conduct, tactics and key figures of Vote Leave rather than, you know, that big EU thing they’re supposed to hate so much.

One of their main sources of frustration is Vote Leave’s refusal to have UKIP leader Nigel Farage as its representative in any of the EU debates. So, obviously, rather than pressing their case through normal channels, Leave.EU did what any respectable organisation would, and emailed the private phone numbers of senior figures at the BBC and Vote Leave out to its entire mailing list.

Which, needless to say, upset those people. Douglas Carswell sent a message asking for his number to be removed, so of course Leave.EU published that too.

No wonder the Brexiters are so opposed to international cooperation when they can’t even keep the peace on their own side. 

I'm a mole, innit.