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”
scandalousbill
PS: The target of inflation is below what has registered
Tom White
Now, now Anon E Mouse, temper temper. ‘Guido’ makes a living raking up muck, and you, a right-winger, make a hobby trolling on a left wing blog, with the clear intention of annoying others. So where’s the lie, love?
I’ve pointed out you talk drivel before – this time I can’t be bothered.
Tom White
Oh, and if you seriously think inflation is set to remain ‘down’ you need your head examined. 🙂
scandalousbill
Anon,
While there has been a marginal increase in employment, inflation, due to imported foodstuffs has gone down marginally, it is, and IMHO, a little early to declare that Tory policy is working.
The two main factors that can take money out of the economy are the Government cutbacks, the impacts we will soon become aware of, and a rise in interest rates. The latter, I feel will be implemented in the UK before the year is complete.
I believe it will be the long term factors that will determine the success or failure of Tory coalition policies, and I am not optimistic that they will have the success you allude to.
Anon E Mouse
Tom White – What you don’t like is the fact you know I’m right on the big stuff and you don’t like it and you also know with Ed Miliband at the helm Labour is doomed.
Since you seem to know the inflation rate ahead of time perhaps you should have been advising the most unpopular Prime Minister in history – Gordon Brown.
I do not spend my time annoying others it’s just that the truth hurts and if you don’t realise that then you need your head examining. Love xxx