Tim Congdon has written for the Sunday Times today, here. His piece is mainly about the nature of the Bank of England's monetary policy errors during 2005-7 and the significance of the broad money supply as an indicator of inflationary pressures. His analysis does not include the latest odd broad money numbers.
Towards the end, he considers the possibility of tax cuts (paired, in his analysis, with spending increases, for reasons that are obscure to me - perhaps just natural assumption?). He states: "Some commentators have hinted that he may try to overcome the monetary straitjacket by “fiscal reflation”, with tax cuts and yet more increases in public spending. That would be the height of folly...Now is not the time for “expansionary” fiscal measures. Such measures would further forfeit public respect for the government and make it more difficult for the Bank of England to cut interest rates." If spending increases were to be part of the package, I would agree. But if spending growth is cut as planned (to 2%) but there are big temporary tax cuts, I don't see why that would be the height of folly or forfeit public respect for the government. My guess is that we just disagree. Perhaps he'll explain why another time.
