Former adviser to chancellor George Osborne, Tory MP Matthew Hancock, has made a massive error in his analysis of the American economy, writes Duncan Weldon.
Tory MP Matthew Hancock has made a massive error in his analysis of the American economy, writes Duncan Weldon
Tory MP and former George Osborne advisor Matthew Hancock has written a post for the Spectator’s Coffee House blog claiming that Labour are drawing the wrong lessons from America.
He accuses Ed Balls of getting “his figures wrong” on the US deficit plan and makes the bizarre claim that the US plan involves cutting faster than his own government’s plan. This is despite the IMF last week describing the UK plan as the “largest fiscal adjustment” of the major economies.
People who live in glass houses shouldn’t throw stones and Hancock himself makes a colossal factual error. His whole argument is underpinned by the notion that if countries do not quickly deal with their deficits then the bond markets will extract a high price. He uses the example of the downgrading of the US last week and claims that this has caused US interest rates to rise.
“The consequence? US interest rates have risen, just as they would do here if we were foolish enough to abandon our plan… The down-marking of US debt, and the reaction of US interest rates that followed, shows the gamble we would be taking if we abandoned our plan.”
The problem with this claim is that it is factually incorrect. US bond yields fell after the downgrade – something widely remarked on in the financial press and something he really ought to have checked before publishing the article.
32 Responses to “Matt Hancock is drawing the wrong lessons from America”
joanna
Actually he’s right that the Obama plan now implies a faster fiscal adjustment than the uk plan – 8% over 4 years compared to 8.6% over 5 years in in the UK. In any case the imf report you cite was written before Obama published his plan last week. The British left has been amazingly slow to react to the new reality in the US.
Maureen Czarnecki
RT @leftfootfwd: Matt Hancock is drawing the wrong lessons from America http://bit.ly/gtJOFu
Rich
RT @leftfootfwd: . @MattHancockMP is drawing the wrong lessons from America: http://bit.ly/go7n6I writes @DuncanWeldon
Anon E Mouse
What’s happening here is the austerity measures are working and everyone knows it. The chancellor has been proven to be correct in his approach towards the deficit and Labour have been proven to be completely wrong.
Instead of coming out and saying that they are pleased for the country blah blah they continue to argue that black is white, night is day. Labour are looking increasingly irrelevant by the day and why this author here believes it is acceptable to contribute to the Labour deficit lies and actually argue about an old plan is just straight forwardly dishonest.
There is no excuse for misinformation under any circumstances and Duncan Weldon should retract the dishonest sections of this post and realise that with the deficit Labour left us in we could build a new school every twenty minutes on the interest alone. Three an hour. Every day but Labour would rather give it in interest to their buddies in the financial sector.
Labour isn’t satisfied with just giving our money to the spivs in the money markets it even rewards them with knighthoods.
For a so called working class party they should be ashamed of themselves and in the meantime Duncan Weldon
it’s time to man up, admit this article is factually inaccurate, print your retraction and start being positive about the Labour Party…
Tom White
Guido ‘Muckraker’ Staines and Anon ‘Tory Troll’ E Mouse. Pass the sick bag. Both wrong, but I can’t be bothered.