>> Given that the hole needs to be filled, This latest statement has the least pain
>> where it would hurt most. NOt sure how you could expect any better from any
>> regime.
He isn't filling the hole in the next 2 years. I don't think he's even stopped digging. You could say he's stopped digging quite so fast.
The 'boiled frog' nature of this budget means borrowing starts to reduce in 24/25, and the next government starts in an even worse position.
It's really a 2 year plan, for example he says capital spending will be frozen from IIRC 24/25 - in other words it will be in the hands of the next government. He has acknowledged it will grow somewhat in the next 2 years.
You can debate to what extent the hole needs to be filled and when. I'm not pretending to be an economist but I AIUI a deficit might not be so bad if it's due to capital spending that has a payback, rather than tax cuts which depend on the beneficiaries choosing to invest their extra money*, make returns and pay more tax which is Trussonomics. If you want to differentiate Labour from Conservative this is probably a point of difference in what they are currently implying.
The basic Keynes theory is that increased government spending, tax cuts and loose money promotes growth and recovery. Truss and Kwarteng went all in on tax cuts while the Bank was tightening money hence the market was unimpressed. Running through my mind is FDR's actions in the 30's when the government started lots of building projects and the USA built dams; even in the UK I think the doubling of all the locks on the Grand Union between London and Birmingham was a government funded project to provide employment - although they might have got a better payback had they built the M1.
*does this even work when money is now so mobile? If I had more money I'd be more likely to buy US shares than UK ones.
Last edited by: Manatee on Thu 17 Nov 22 at 22:41
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