Labour’s
spending not cause of current economic climate
Ed
Balls laid to rest the myth that the coalition use to justify
the massive cuts they are rushing through.
It's official “Labour’s
spending was not the cause of the current economic climate.”
Economist Simon Kirby from The National Institute of Economic
and Social Research told Kathy
Newman’s Channel 4 blog : “No, Labour’s
spending is not the cause (of the current economic climate)
but what’s happened is a consequence. If borrowing figures
had been lower we’d have gone into the crisis in better
shape.” [NIESR is Britain's longest established independent
economic research institute]
Before the financial crisis hit, in 2007/08 the government borrowed
£33.3bn, and planned to borrow £43bn the next year.
When the crisis hit, borrowing shot up to £156bn in the
2010 financial year. Though it’s worth pointing out that
this, as the 2009 budget shows, is largely down to the fact
that the Treasury’s own projections for the tax take plummeted.
It had expected growth in revenue, but in fact it got a collapse.
By 2009/10 the Treasury was taking about £112bn less than
they had expected to. And that’s why they needed to borrow
so much. Yes, spending went up a bit. But really, they just
had a lot less income than they had planned for.
The Condems racked up borrowing for August to £15.9bn,
the highest August borrowing on record. Now a third of the year’s
running total is £52bn, which is only 7% less than last
year for the same period. City analysts expected £13.2bn
borrowing for August, considerable less than the £15.9bn
On the other hand, consumers were more cautious in borrowing
through overdrafts, credit cards and loans. Repayments in August
on unsecured loans exceeded unsecured borrowing by approximately
£100m. However mortgage approvals for July, including
‘Buy to Let’ increased by 14% on the year before.
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