Robert Peston today reports that the government is considering a large rise in public expenditure to counter the recession. He states:
the British government is being forced to think about something new: a substantial and sustained increase in public spending to offset the contraction of spending by the private sector (there may be little point in cutting taxes, since nervous consumers and businesses would probably hoard any extra cash that went into their pockets).
The debate now will rapidly become not between whether we try fiscal expansion or not, but, rather, whether we try the government's expenditure-increasing route or the tax-cutting route I have been recommending since July.
