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Saturday, April 25, 2009

Why politicians and economists should read Samuel Brittan on budget deficits

Amidst all the understandable concern about the size of UK government borrowing, some perspective is required. Yes the figures are staggering. But it is worth reading Samuel Brittan's comments on the current fiscal situation, as I have argued before. This piece, in the FT last week, is well worth reading:
A long cool look at budget deficits
April 16 2009 22:04

The year 1992 was the last in which the Conservative party won a British election – to the surprise of most political pundits. It had some superficial similarities to the present. Public sector borrowing was on the rise and at its peak in 1993-94 reached 7.8 per cent of gross domestic product, regarded then as shockingly high. / Columnists / Samuel Brittan - A long cool look at budget deficits

Brittan, writing before this week's Budget but with similar estimates for public debt, makes the point that we have had higher levels of debt in the past. He also argues that Norman Lamont managed to chart a course to improve the fiscal position over the years following the 1990s recession without damaging the recovery.

I suspect that for the moment, such calls for perspective on the current economic and fiscal outlook are going to be at best ignored, if not aggressively refuted. Alistair Darling is going to have to rely on time. It is unlikely that the outlook will suddenly appear all sunny and bright in a year's time but we might still have a less pessimistic vision of the future before us.

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