George Osborne's definition of "intergenerational fairness" has been questioned by leading economists. They say, "risk should be shared out across generations".
George Osborne’s declaration that his first Budget was “fair” because it attempted to prevent debt being carried over from one generation to the next has been called into question by a group of leading economists brought together by the Bank of England.
Facing criticism about the distributional impact of the June Budget, George Osborne sought last week to include “intergenerational fairness” into his definition of “progressiveness and fairness”. In a speech to the City, the Chancellor said:
“And fairness extends across the generations, for what is fair about forcing the next generation to pay for the debts of our generation?”
But the summary of the Bank of England’s recent Monetary Policy Roundtable included a line which stated that:
“risk should be shared out across generations: a single generation should not be expected to bear all the costs of having the bad luck to experience a war or a financial crisis directly.”
Most of the increase in Government spending in recent years has been caused by financial interventions or automatic stabilisers such as increased unemployment benefits. Total spending was around 41 per cent until the financial crash. It stood at 47.5 per cent in 2009-10. (see Chart C5 of the June Budget)
The minutes of the meeting are reported in today’s Financial Times and cast doubt over the Bank of England’s stance on spending cuts. The paper reports that:
“Economists present at the event said there was less room for the Bank to offset public spending cuts with lower interest rates, because the accelerator pedal of monetary policy had already been pushed to the floor. Meanwhile, they said, leading economies worldwide were planning to take an axe to public spending simultaneously, potentially amplifying the pain…
“The average forecast for growth next year is 2 per cent among independent economists, but the Bank believes growth will be 2.8 per cent.”
29 Responses to “Leading economists question Osborne’s definition of “intergenerational fairness””
Anon E Mouse
Shamik – Yeah I’m off somewhere else.
Thanks dude – I’m loving this!!!
Clegg slams “partial” IFS - yet in April he was “really delighted” with it | Left Foot Forward
[…] that the Budget was fair when examined on an “intergenerational” basis – a claim refuted at the Bank of England’s Monetary Policy Roundtable; Treasury minister Mark Hoban today […]
Clegg slams “partial” IFS - yet in April he was “really delighted” with it | Left Foot Forward
[…] that the Budget was fair when examined on an “intergenerational” basis – a claim refuted at the Bank of England’s Monetary Policy Roundtable; Treasury minister Mark Hoban today […]
Chris
@Mental Mouse
Although you did state “Now I’m off Chris – kindly move along please there’s nothing to see here…” you’ve now brought it up on another thread so I think I should reply. But do note that PFI has fuck all to do with the original story and merely the first attack line on your script which you run through each time you post.
Like I said earlier, PFI is a complex issue which is probably beyond the limits of your capabilities. As the story in my link supported PFI isn’t all bad but imho it has two excellent characteristics that have made me enamored of it.
i. Keeps the debt of governments books.
ii. Makes the tories pay for infrastructure projects.