Is the Chancellor's medicine marvellous or simply a sugar pill? Our panellists battle it outby Oliver Kamm, Simon Wren-Lewis / January 16, 2015 / Leave a comment
Published in February 2015 issue of Prospect Magazine
The economy may now be growing at a respectable pace but the scars of the banking collapse remain. The remedial measures to deal with the crisis were justified: near-zero interest rates, flooding the financial system with liquidity, taking big public stakes in the banks, and a rise in government borrowing. The recent outperformance of the United Kingdom compared with the eurozone is not due to the economics of austerity but the opposite. Monetary policy has been much more expansionary in the UK and since 2012 the government has eased up on its proclaimed fiscal austerity—indeed fiscal policy was slightly expansionary last year.