I don’t know if the Obama administration is as enthused by the idea of deficit reduction as James suggests, not least since the American left has looked at George Osborne’s approach and judged it a failure. Kevin Drum, for instance, says Osborne’s plans are “not likely to work” and Britain “is probably going to be paying the price for this folly for many years to come”. Matt Yglesias agrees, writing that “Austerity’s failure in the United Kingdom should inform the American policy debate.”
This is all occasioned by a gloomy New York Times article with the headline British Deficit Defies Advocates of Austerity. But if the economy remains weak, inflation is too high and retail spending is down there are, as Stephanie Flanders pointed out this week, some better signs too:
The number of people in work has risen by an impressive 143,000 – and, for once, the rise has been driven by an increase in full-time work.
There are now 390,000 more people in work than there were a year ago, though still 331,000 fewer than before the crisis. That increase in total employment since the start of last year has been despite a 132,000 fall in the number working in the public sector.
Perhaps this is a blip or perhaps the troubling figures are blips. You pays your money and makes your choice. More to the point, our American friends may be under the impression that Osborne plans to cut the deficit – and public sector debt – rather more rapidly than is actually the case. A couple of charts Pete posted recently remind everyone that this is not the case and that, befitting a weak economy, the government will run a large deficit this year:
and the long-term outlook remains troubling:
This being the case perhaps Osborne’s problem is that he isn’t being radical enough, as Fraser suggests. The cut to corporation tax announced in the budget was a good start but more could have been done to encourage growth.
UPDATE: Megan McArdle has more and typically sensible things to say on this.
Comments