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Tuesday 25 January 2011

Government Cuts Followed by Lower Growth

The BBC reports that growth is lower following the onset of the Tory austerity programme. What a surprise.  If George Osborne manages to keep his promise of sticking to the cuts programme, growth can only get worse.  As growth gets worse, tax revenues fall, and the deficit widens.  Then the Tory led government will have a choice of more cuts (perhaps further damaging growth) or reversing its economic policy.  All this was quite predictable, and was predicted by Labour and the Liberal Democrats at the General Election.  Nick Clegg and his team must now be hoping they were wrong.

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