On his blog, Daniel Hannan preempted the pre-Budget report with a recipe for economic disaster. He urges the UK to adopt Ireland's catastrophic policy.
The gift that keeps on giving, is at it again. On his Telegraph blog, Daniel Hannan preempted the pre-Budget report with a recipe for economic disaster. Repeating his post in full he says:
“If you were overdrawn and in negative equity, with debts on a dozen credit cards and unpaid bills littering the table, what would you do? Would you try to spend less, or would you set out to spend more?
“Ireland is trying to spend less, with cuts across the board. Everyone will share the pain, from cabinet ministers to benefits claimants. The Taoiseach, who is expected to take a 20 per cent salary reduction, reckons that the new budget will reduce Ireland’s deficit by 4 billion euros.
“The United Kingdom, by contrast, wants to spend more. Alistair Darling will continue to expand the budget, and will raise taxes accordingly.
“I have been disobliging about Biffo Cowen in the past, but the fellow is at least trying to do the right thing, acting in the national interest, even if that means dropping in the polls. Labour, by contrast, would rather bankrupt Britain than alienate its remaining supporters in the public sector. Who are the patriots here? Who the rogues?”
The facts:
– Irish unemployment is 12.5 per cent
– the country is experiencing deflation at -6.6 per cent deflation
– GDP has fallen 7.4 per cent over the past year (and GNP by 11.6 per cent).
– And despite the cuts they have still had their credit rating downgraded.
Don’t forget the Chancellor’s line that, “The choices are between going for growth or putting the recovery at risk.” Well said, Darling.
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27 Responses to “Is Daniel Hannan insane?”
george
you’re comparing apples with oranges. Ireland is in a bad economic situation which they will try to mitigate by reigning in government spending. as we should. just listing some stats which show Ireland is in a bad position now doesn’t mean their policy ‘from now’ is daft.
Duncan
George,
I’d argue that their decision not to have a stimulus and to attempt to balance the budget last year and earlier this year is what has caused the awful situation.
It is also a policy praised by many Tories and appears to be what Cameron & Osborne argued for last year.
george
they couldn’t afford a stimulus. they have been downgraded without one. if they’d have tried it they’d have been off to the imf
Duncan
George,
I disagree.
I’m with Credit Suisse on Ireland.
http://www.bloomgerg.com/apps/news?pid=20601087&sid=aKSsZDqhrz14&pos=7
“By cutting spending you lower the trend line of growth and store up bigger fiscal problems down the line.”
george
maybe. thanks for the link.
in the UK case I think the most important thing is not to lose the AAA rating. that means some reigning in of spending now regardless of the stimulus before (which was probably necessary).
i think if we’d controlled spending a bit more in the boom as Australia did, we could have had a stimulus without the PSBR problems. ie balance the books ‘over an economic cycle’ which was a good idea in theory, just wasn’t carried out in practice because we’d “abolished the banking cycle”