Who would lend to a bankrupt Britain?
Wednesday, 9th December 2009
Alistair Darling’s budget forecasts assume that Britain can keep borrowing all it wants for the foreseeable future.We may not be so lucky, says Irwin Stelzer
Of course, it might not come to this. There might be bipartisan agreement to reduce the size of the public sector and its generous compensation schemes. There might be agreement to snatch from the middle class some of the benefits it now receives as a bribe to ensure its continued support for the welfare state. There might be a deal to reform the tax structure so that it no longer overly taxes jobs, risk-taking, and entrepreneurship. And pigs might have wings.
I exaggerate. All of these changes are within the reach of a new British government. Watch the market for default insurance to see whether investors believe that the Tories will form the next government, and if so, whether Osborne can win his battle with Clarke, and David Cameron has the spine to do what he knows needs to be done to put Britain back on the path to fiscal sanity.
Irwin Stelzer is US columnist for the Sunday Times and director of economic policy studies at the Hudson Institute.
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