Spend, spend, spend to beat the recession

By Jonathan Walker on Oct 27, 08 06:56 PM in Politics

Should we be relieved that Gordon Brown is willing to borrow more in order to keep the economy moving?

The effects of the recession, which is almost certainly what we are in, were seen today when Jaguar-Land Rover closed down its Merseyside plant for a week, following cuts in working hours at the Castle Bromwich and Solihull plants.

Part of the Prime Minister's response is to inject more money into the economy by spending more - even if it has to be on credit.

He told business leaders today: "That means that the responsible course of government is to invest at this time, to speed up economic activity."

And he tacitly admitted that meant borrowing, adding: "And as economic activity rises and as tax revenues recover, then you would want borrowing to be a lower share of your national income."

In other words, we'll pay off the debt once the economy recovers.

But if, as some reports have claimed, we are heading for a £100 billion budget deficit, that will be an awful lot of money for you and me to pay back, even once things recover.

If the economic chaos does turn out to be a temporary blip and things are back to normal in a year, perhaps it won't matter.

But nobody really knows if that will happen. Surely there's an argument for Government following the example of many of its citizens and watching the pennies until the economy improves?

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2 Comments

Ursula said:

Jonathan, sometimes none of us has choice but to throw money at a problem in order to "solve" it. No guarantees given that it'll work.

I'd recommend the national curriculum making practical lessons in gambling compulsory: Learn at one's most impressionable age about cash flow, liquidity, the Mafia and debtors' prison; if only to understand - in a few painful steps - that our (in)actions have consequences.

October 27, 2008 10:19 PM

Curly said:

I have something to lend Gordon Brown, what do you have?

October 28, 2008 10:56 AM