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The budget was singularly lacking in ambition when it came to the government’s role in creating a sustainable, inclusive and investment-led recovery.
There was no new green stimulus despite the UK facing a £100bn funding gap to reach its net-zero by 2050 target and despite its hosting of the global COP26 climate change summit this November.
“I am highly sceptical about this story of ‘pent-up demand’. A shrinkage in national income by 10% implies a fall, not rise, in national saving. Saving out of income may go up, but income itself is lower. That’s why it’s not like in a war, when you have full employment and rising wages, but less to spend money on. “
The focus of economic policy should be on maintaining a high, sustainable level of employment. This is correct theoretically, practically, and socially. It counterbalances the capitalist market system’s tendency not to create a high level of employment.
The government’s ineptness in handling the health crisis will thus impact both the supply and the demand sides of the economy.
As Britain enters a severe recession that will lead to large fiscal deficits and growing public debt, a question presents itself — when are deficits and debt too large?
Market economies tend to generate unemployment not full employment. Real economies produce many goods and services with quite different process of price determination. Governments and central banks at most influence not determine money in circulation. Inflation is not the result of too much money. That is its consequence.
There is a need for massive reform of tax after the coronavirus crisis
To avert permanent economic damage during the worst slump for 300 years, the government has to provide emergency credit to business, guarantee loans, offer grants, defer tax and rate payments and directly pay the wages of furloughed workers
The United Kingdom has made its first step toward ending the rhetoric of fiscal austerity, yet reactions to the budget on 11th March demonstrate how engrained the austerity ideology is in the media.
Robert Skidelsky argues the ousting of Chancellor of the Exchequer Sajid Javid points toward a broader global shift in economic policy.
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