A stimulus Osborne can live with

If the Chancellor won't boost infrastructure spending, tax cuts are the best alternative.

Next Wednesday's Budget will be yet another reminder of the tough economic climate we're in. Over the past year, real GDP has increased by just 0.8 per cent, and forecasts for 2012 are not looking any better.

George Osborne will deliver his Budget against a backdrop of anaemic growth, high inflation, and unemployment rates not seen for 17 years. Consequently, he is under pressure to announce another Budget for growth. Expect Osborne to point to a previously announced cut in corporation tax to 25 per cent from April.

But one has to question if this is the best way forward, or if the Chancellor has got it the wrong way around. Sluggish growth has primarily been a result of both weak demand and squeezed household incomes. And the barrier facing companies is not high taxes but the uncertain outlook for demand. Given this uncertainty, companies are currently making a choice not to invest, or recruit employees - in effect intensifying the problem. An alternative and targeted solution would be to increase public spending, directly addressing faltering demand.

According to OBR analysis the effects of a change in spend are estimated to be two to three times greater than the effects of changes in taxation (although it focused on changes in personal tax rates rather than corporation tax). Increased public spending has a greater multiplier effect on the economy because more of the money goes straight into the UK economy, whereas cutting taxes can simply lead to people saving more and when they spend a substantial proportion of the stimulus is 'lost' overseas in the form of higher imports.

The best way to stimulate growth is to increase infrastructure spending. This would give the economy the kick it needs, boosting demand. Additionally, the benefits extend to the long term as infrastructure spending not only increases growth but adds to the UK's productive capacity. Yet there is no sign that the Chancellor will drop his rigid austerity agenda despite its poor track record - over 2.67 million people out of work - and waning support.

So what's the second best option given Osborne's unwavering political commitment to spending cuts? Personal tax cuts offer an alternative - and quick - method of boosting demand and a number of options exist. Temporary cuts in VAT or the National Insurance contribution would both serve to put more money directly into people's pockets, boosting demand and encouraging businesses to invest and create the jobs we desperately need. This could be largely paid for - over a six-year period - with a "mansion tax", which would hit only the very wealthy and so have little impact on the economy.

The economy is flatlining. To get the economy back up to speed we require measures that address the root of the problem - weak demand. While higher public spending offers the most 'bang for your buck' it is unlikely to happen. The next best thing would be to use temporary personal tax cuts to increase consumer demand.

Amna Silim is a Researcher at IPPR

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Just you wait – soon fake news will come to football

No point putting out a story saying that Chelsea got stuffed 19-1 by Spurs. Who would believe it, even if Donald Trump tweeted it?

So it is all settled: Cristiano Ronaldo will be arriving at Carlisle United at the end of the month, just before deadline day. It all makes sense. He has fallen in love with a Herdwick sheep, just as Beatrix Potter did, and like her, he is putting his money and energy into helping Cumbria, the land of the Herdwick.

He fell out with his lover in Morocco, despite having a private plane to take him straight from every Real Madrid game to their weekly assignation, the moment this particular Herdwick came into his life. His mother will be coming with him, as well as his son, Cristiano Ronaldo, Jr. They want to bring the boy
up communing with nature, able to roam free, walking among the lakes and fells.

Behind the scenes, his agent has bought up CUFC and half of Cumbria on his behalf, including Sellafield, so it is a wise investment. Clearly CUFC will be promoted this year – just look where they are in the table – then zoom-zoom, up they go, back in the top league, at which point his agent hopes they will be offered megabucks by some half-witted Chinese/Russian/Arab moneybags.

Do you believe all that? It is what we now call in the trade fake news, or post-truth – or, to keep it simple, a total lie, or, to be vulgar, complete bollocks. (I made it up, although a pundit on French TV hinted that he thought the bit about Ronaldo’s friend in Morocco might not be too far-fetched. The stuff about Beatrix Potter loving Herdwicks is kosher.)

Fake news is already the number-one topic in 2017. Just think about all those round robins you got with Christmas cards, filled with fake news, such as grandchildren doing brilliantly at school, Dad’s dahlias winning prizes, while we have just bought a gem in Broadstairs for peanuts.

Fake news is everywhere in the world of politics and economics, business and celebrity gossip, because all the people who really care about such topics are sitting all day on Facebook making it up. And if they can’t be arsed to make it up, they pass on rubbish they know is made up.

Fake news has long been with us. Instead of dropping stuff on the internet, they used to drop it from the skies. I have a copy of a leaflet that the German propaganda machine dropped over our brave lads on the front line during the war. It shows what was happening back in Blighty – handsome US soldiers in bed with the wives and girlfriends of our Tommies stuck at the front.

So does it happen in football? At this time of the year, the tabloids and Sky are obsessed by transfer rumours, or rumours of transfer rumours, working themselves into a frenzy of self-perpetuating excitement, until the final minute of deadline day, when the climax comes at last, uh hum – all over the studio, what a mess.

In Reality, which is where I live, just off the North Circular – no, down a bit, move left, got it – there is no such thing as fake news in football. We are immune from fantasy facts. OK, there is gossip about the main players – will they move or will they not, will they be sued/prosecuted/dropped?

Football is concerned with facts. You have to get more goals than the other team, then you win the game. Fact. Because all the Prem games are live on telly, we millions of supplicant fans can see with our eyes who won. No point putting out a story saying that Chelsea got stuffed 19-1 by Spurs. Who would believe it, even if Donald Trump tweeted it?

I suppose the Russkis could hack into the Sky transmissions, making the ball bounce back out of the goal again, or manipulating the replay so goals get scored from impossible angles, or fiddling the electronic scoreboards.

Hmm, now I think about it, all facts can be fiddled, in this electronic age. The Premier League table could be total fiction. Bring back pigeons. You could trust them for the latest news. Oh, one has just arrived. Ronaldo’s romance  with the Herdwick is off! And so am I. Off to Barbados and Bequia
for two weeks.

Hunter Davies’s latest book is “The Biscuit Girls” (Ebury Press, £6.99)

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 12 January 2017 issue of the New Statesman, Putin's revenge