The Conservative position is that the British government is at risk of being unable to fund its debts, and is at material risk, therefore, of being unable to service the additional debt that would need to be taken on in order to deliver the sort of tax-cut-focused fiscal stimulus I have argued for since July and that is now favoured by, inter alia, the British government, most of the quality and tabloid press, and almost every major trade association. Instead, since there is a risk that additional borrowing might lead to sovereign default, the Conservatives propose to cut or reduce the growth in public expenditure.
Obviously this isn't what I believe (specifically, I don't believe things are that bad - I don't believe the UK government is going to be regarded as at risk of sovereign default and unable to service its debts), but it's at least an arguable position, and our move on public expenditure yesterday was a welcome move towards some consistency - making our policy coherent, if not correct. Obviously no-one listens to me, but just in case, I note the following. If it were true that Britain were on the cusp of being regarded as at risk of sovereign defulat, the main contributor to that would indubitably not be the government's fiscal policy. It would be the government's assuming of the liabilities of the UK's nationalised banks. So if the Conservative position is now that we should adopt an Austerity approach and control growth in the government's debts, should we not be seeking whatever scope might remain for the government to wriggle out of its nationalisation "recapitalisation" programme of the banks?
