Friday 24 April 2009

Word of the Week: Darling’s rickety bridge

Alistair Darling, Chancellor of the Exchequer, delivered his second UK budget statement on Wednesday. With an unenviable task, Darling’s efforts have caused a reaction of outrage given his perceived over-optimism. The government’s forecasts of 1.25% economic growth in 2010 and 3.5% in 2011 compare with consensus forecasts of 0.3% and 1.9% respectively. The FT has called the budget a ‘short and rickety bridge over a deep chasm’ whilst leader of the opposition David Cameron has branded the growth forecasts less of a U-turn and more of an economic ‘trampoline’. There seems to be little approval of Darling’s plans as he has bowed to pressure to increase tax only on high earners as a political tactic ahead of next year’s general election. Darling has done little to comfort fears over the level of national debt (68% of GDP next year) which is at its highest in any peacetime era. The government has continued discretionary spending against the advice of the Bank of England and avoided broader tax rises. For his part, Darling argues that we cannot cut our way out of recession but we can grow our way out. But he is showing increasing confidence in the future of an ailing economy and we can only hope that this is for rational reasons rather than political ends.


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