John Redwood proves today that having a Cambridge degree and a background in banking still doesn’t stop you from talking bollocks about the economy.
“Why are there cuts when spending is going up?” he asks, “Running all the key public services for the £700 billion on offer should not be difficult.”
It seems that, like many others, he is confused about the difference between cash spending and real-terms spending. (See Thursday’s post here.) Fortunately, the Telegraph’s economics editor Edmund Conway was on hand to put him right. I’m glad it was someone from the Telegraph and not the Guardian or Independent.
The 25% cuts that Mr Redwood doesn’t think we need is not a scare story made up by ranting lefties or public sector unions. The Institute for Fiscal Studies confirms the figure in this presentation and warns that it could be even worse if the government can’t cut welfare or has to increase NHS spending in real terms.
It doesn’t matter how you do the maths, we either cut services, cut welfare, put up taxes or borrow more. Any or all of those scenarios will be gruesome, though more gruesome for some than for others. As Edmund Conway concludes:
The impact on the wider economy will be worse than anything since the 1920s. Trying to pretend the Government has mapped out a path towards more flabby Government is dangerously misleading.
That’s economist-speak for ‘Redwood, you’re talkin’ shite, yer numpty’.
When I get a moment I’m going to do a separate blogroll for those newspaper commentators who IMHO talk the most sense on economics and business. Edmund Conway will be going on there.