Mark Littlewood is Director General of the Institute of Economic Affairs.
The Chancellor is right to stick to his guns on deficit reduction. The dividing line in the debate is between those who believe that spending more on the bloated public sector would assist with the economic recovery and those who don’t. George Osborne is on the right side of that dividing line. Stabilising the dire state of the UK’s public finances and providing the markets with unwavering confidence that Britain is determined not to head the way of Greece, Ireland or Portugal is a prerequisite in getting our economy onto a sound footing.
It is worth reiterating though – because the averagely interested observer might not appreciate this from the froth of much of the media coverage – that the overall cuts package proposed by the Coalition is relatively modest. Total spending will only fall by about 3.5% in real terms by the end of the Parliament and the national debt will actually grow by about £400bn. The overall financial burden we are shuffling onto our children is continuing to grow. The price they will pay tomorrow for our largesse today continues to rise. The government is slowly getting the public finances into some semblance of order. But they are not engaged in the sort of serious recalibration of the private and public sector that the Trade Unions would have you believe. And many of us would actually like to see.