The Nobel laureates Luddite, Mr Danger, Indu Pendent and Robert Andersen presumably agree with Cameron's analysis. In his 2009 Conservative Party conference speech, he said, “Why is our economy broken? Not just because Labour wrongly thought they’d abolished boom and bust. But because government got too big, spent too much and doubled the national debt.” But even the IMF has concluded that 50 per cent of current budget deficits around the world are explained by collapsing tax receipts, not by ‘excessive public spending’. And much of that spending was to bail out the bankers, who have responded by plunging us into yet another crisis.

Leaked Treasury figures show that the austerity budget will result in the loss of up to 1.3 million jobs across the economy over the next five years. The job losses in the public sector will result from the 25 per cent inflation-adjusted reduction in Whitehall spending over the next five years. As Vince Cable said in February 2010, before joining the slashers, “Slashing spending now could push the economy back into recession.”

I've never known a Chancellor like Boy Georgie. He and his mate Dave are a couple of "snake oil merchants". They are like a couple of public school "wide boys" at an Eastend Market selling tosh.

for the safe haven deniers:
GERMAN CDS trading more expensivley than UK this morning... First time EVER.
a credit default swap is an insurance contract on someone defaulting on their interest payments.
SIGNIFICANCE: well, anything might follow cos we quasi crashing. However, this is makt sying more worried about germany cos it looks like that they will have to stump up a couple of TRILLION- that is the endgame to keep euro together- strangely, no econmist or politician evr mentioned this before.
I'm staringto think that these guys only get invited back to sher their wisdom because of their title, rather than their calls on where we're heading.
I don't have a great memory, didn't Sartres have a name for those who live by their title and not their actions... that's it, he called them scum

@ matthew Fox
I'm surprised that the editors at NS have not singled you out for your contribution to the debate, namely one out of context data point and then a couple of insults at Luddite.If not for your economic contribution, surely your wit.

Ah yes, those strong economies in Greece, Ireland, Portugal, Spain.

Get a grip. Perhaps the reason debt interest rates have fallen in America is they've just avoided a massive default that a week ago was only 50/50.

Many on the political-left keep apologising for Labour economic recklessness. Labour spent to save the banking sector from financial meltdown.. Or in Brown's words 'to save the world'
All Brown did was transfer massive private debt into the public domain. Adding to a already humongous public debt crisis. The real reason we are all in this financial mass is Brown, along with this reckless friends. Ed Miliband and that awful Ed Balls, spend far more money than the nations ability to create wealth.

Skooter: That's spending more money than you are earning, in a private household that leads to bankruptcy.

Matthew fox: It's wankers with Nobel prize in economics thats created this mass, but you know all about wankers.

Stephen,

Debt interest rates were low throughout the debt ceiling debacle. It was political nonsense; the markets knew there was no chance of a default.

@ Willp
agree with some of what you say, some not.
Firtsly, the point by the IMF that tax receipts responsible for 50% of the deficit. I don't rate these guys, they have made some howlers over the years, and I question their integrity. However, it's not unfair to ask could the receipts in good times have been better spent, on new tecnologies and industries that the world is buying, and also, would the opportunity cost of having created a bloated state vs having fostered and aided our already existant high tech industries not have stood us in a FAR better place than where we are now. Look at Germany.I'm not anti Keynes, just anti keynes when the money has so blatently been wasted, and the take up of debt must be judiciuously determined- unless you're a multinational with access to taxpayers bailouts, then as the small man 'having a go' you can forget it- the system is the result of 30 years of vested interest at the media, govt and banking levels- and capitalism reared it's ugly head when it came to levelling the playing field. The small firm cannot access debt capital mkts, and banks won't pass the cash on because they are bust (it's just no one wants to admit it- bit too uncomfortable that one). So unless a sov state maintains it's stable rating, and assuming that some money eventually works it's way through (at a hefty surcharge for the bank to recapitalise...er i mean allocate the risk)... then the last thing projects need is some anomalous cost of funding/fantastical IRR because our name is rubbish (and to those who simply disagree that the mkts REALLY debated on our triple AAA status, i implore that you consider the full consequence of your politically motivated discount. I labour the point/cause/effect because there seem to be a lot of theoreticians occupying leadership posts right now who don't understand how a business works, don't understand confidence, human relationships and find common sense hard to grasp. I attacked Krugman because he's of that ilk, he sees credit as something that's abundantly available , a right even-dosen't get where it comes from and does not understand what an imbalence leading to lack of confidence can do. He got a Nobel economics prize in 2008 examining global patterns of trade... did he mention anywhere the building imbalence and the crash it's going to cause? Does he accept that artificially boosted demand with excessively prolonged periods of cheap money hs led to a crisis because 1) lenders are getting nervous and are seeing better opportunities(rise of Asia as a trading block in itself-this is his chosen topic right?!?!)and 2) demand falls away when individuals are gripped by fear. Nope- he just keeps bleating on about spending more to create demand, and fiddling with general equilibrium models... At least Greenspan had to be convinced of the productivity miracle of IT. And what's frustrating is that Brown, Balls and the rest of these new armies of econumbskullists carry on with the same broken ideas, even when we're seeing the disconnect in finace going on around the world AS WE SPEAK!!!. I understand that once the ego takes control it's difficult to back down, so guess we'll have a crash.
You write"Leaked Treasury figures show that the austerity budget will result in the loss of up to 1.3 million jobs across the economy over the next five years" 5 year projections from the treasury. 5 year projections from anyone? Have we as a species become so disconnected from our instincts that we rely on 5 year projections made in massisvely turbulent times to found arguments on? perhaps we might look at what is going on around us and not discount the annecdotal so much. I mean I remember reading 20 to 30 year projectiuons by Brown not so long ago... How do ecolonists believe in their models so much they print 30 year predictions (useful for selling bonds though i.e. indebting tax payers, or more accurately our kids, so that the govt can buy votes now with e.g. grandiose £11Bn pound computer projects! There I was thinking that debts being passed on to children had been abolished a few hundred years ago. Silly me...well, maybe will lose 1.3mn jobs, maybe not, but printing money to keep people in jobs for which there is no demand is no solution. Economics, I thought, is about the science of managing the resources we dig out the ground to make into stuff to make life more comfortable- it's not about conjuring up forever positive wealth effect multipliers. Dynamical systems behave differently over time, differently with seed values. These 'economists' are nothing more than a high order of Clowns, they display no mathematical rigour or understanding- how else can they not see that the spending they so crave, the too much too fast mantra of Balls is not the best path right now because there is a measurable negative multiplier at work. People are scared, so they are paying down debt, hanging on for a rainier day(rainy days are foreign concepts to these guys), I don't like using terms like negative multiplier effects, I prefer intuitive approaches. As for the cuts in spending causing the recession...well an illegal unfunded war (the one thing did krugman see was the monstrous hole in the US balence sheet left by Iraq (more taxpayer money being funneled over to some private companies), luckily he didn't have to work anything out, just had to spot the mahhosive debt the Iraq war left in Us balence sheet, gold sold at 20 year lows, farcically managed computer project, wastage beyond credulity, perhaps this might have helped avoid a recession if the money had been spent wisely- but it wasn't. So we can cry over spilt milk or get on with recoivering as quick as possible- what we must do, though, is be careful not to follow the comedic crazies and there mad ideas of incresing debt as the workd economy risks slam dunking-true it worked in the past, but it made the bubble bigger. In chaos theory one seed value run thrugh an iteration n times takes you to infinity, another converging onto a point (these are the maths of fractals, nature etc)and it applies in econmics. What I'm saying is we're at a different point to when pump priming worked in the past, namely the bubble is massive-we should have had the crash, the usual brake, but the politicians coudn't handle that heat so they decided to expand the bubble a great deal more.
Withyou on tax cuts , and actually they will suffice. Warner is wrong in thinking normal market economics can't provide an answer because if a bank were to be functioning properly i.e. allocate capital to risk effectively then one does not need a command economy- in other words, it is precisely because normal market economics are NOT allowed to function properly that solutions are not being arrived- and what is disallowing the normal mkt economics? vested ineterests, politicians in govt and private industry, economists who can never predict a crash but are regularly used as 'evidence' that one policy or another is right. I do aggree with him on the QE- it has to circumvent the banks- they are broken, and everyon'e avoiding that one right now

The UK isn't a "safe haven" try telling that to the millions that walk thousands of miles to get here.
The truth is this country cannot afford it's bloated public sector and it's bloated pensions. whether we wish to or not, the cupboard is empty. Mr Milliband and Ed Ball's the shadow chancellor, were both advisers to Gordon Brown at the Treasury when Labour's wasteful splurge on public spending was conceived and enacted. Labour's economic credibility crumbled as fast as the nations finances. Labour does the country no favours by pretending there is an alternative to the coalitions draconian austerity measures.

Paul Krugman is s first order clown. His old school economic theories are bring and broken, but this assertion that people buy 10 year debt because the short end looks like it will stay lower.... I laughed so hard it hurt. It shows a tOTAL and COMPREHENSIVE lack of any understanding about risk, theory... but aside from all that, it shows a lack of common sense ... buying 10 year paper because the sgrt end is lower... deja vu anyone? i can't stop laughing

"the coalitions draconian austerity measures"

Sorry, 3.7% over 4 years is 'draconian'? Maybe if you mean Draco Malfoy.

Willp: You don't need to be a 'Nobel laureates' To understand Labour lost control of the public financies.
The free market isn't working because it's no longer free. stifled by big government and manipulated by big business.