None of the political parties has a plan for the deficitby Bronwen Maddox / October 16, 2014 / Leave a comment
Published in November 2014 issue of Prospect Magazine
The ritual coda to the British party conference season is not the moment when the last party leader speaks, but when the International Monetary Fund, holding its annual get-together in the still summery streets of Washington, awards its marks for the health of the United Kingdom’s economy. In the past few years, Christine Lagarde excoriated George Osborne for the dangers of his austerity programme. This time, her team praised the UK for consigning the effects of the financial crisis to the past, and reckoned that it would be the fastest-growing large economy in the developed world this year, outstripped only by the United States in 2015.
The criticism of the past was too harsh; this pronouncement is too generous. It ignores the twin uncertainties facing the UK now: how the deficit is to be closed, and the impact of higher interest rates when those come. It also makes too light of the other intractable problems: the housing crisis and the failure of wages to rise faster than inflation (a problem shared with other leading developed economies, which Prospect has focused extensively on this year). But the IMF is not alone in glancing over these issues. Leaving aside Ed Miliband’s failure to mention the deficit in what was rightly called one of the worst political speeches of modern times, the Conservative and Labour conferences failed to answer…