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Why we must continue to spend after the pandemic to avoid another stagnant decade

According to the standard economic model, the government should raise taxes early and focus on tackling the Covid deficit. But that strategy would worsen the deprivation already caused by austerity

By Jonathan Portes  

Photo: Matt Crossick / Alamy Stock Photo

We’ve been here before. The Chancellor wants to make “fiscal discipline” a “key dividing line” with Labour at the next election. If so, he’s learned the wrong lesson from George Osborne—putting the political interests of the Conservative Party ahead of the needs of the economy. Osborne’s strategy was successful, on its own terms, as the 2015 election showed. But his principal legacy was the hollowing out of large parts of the public sector, especially social services and local councils, and a woefully inadequate benefits system. Far from “fixing the roof while the sun is shining,” austerity made us more…

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