Despite policy interventions in the form of fiscal stimulus, the injection of massive amounts of capital into banks, the lowest official interest rates on record and quantitative easing amounting to £175 billion, the UK economy remained in recession in thetest
The major parties seem to agree that public spending cuts will have to bear the brunt of the effort to reduce the deficit because higher taxes would be worse for the economy than spending cuts. This consensus is based on a view that countries with higher taxes perform less well than countries with lower taxes. In fact, the long-run evidence to support this claim is flimsy.
While the OECD and other forecasters continue to pump out gloomy assessments of the outlook for the UK economy, most commentators appear not to have noticed that the decline in manufacturing activity ended as long ago as January.
