Post on the economy - 6/12/2010
Posted by Jacob Rees-Mogg, MP for North East Somerset, at 17:06, Mon 6 December 2010:
One swallow does not make a summer, even less does one good economic forecast mark a recovery. However, although there may yet be setbacks, not least because the global situation remains so uncertain, the Chancellor’s forecast on growth this week is encouraging.
Previously, forecasts have been produced by the Treasury and have had a large dose of political saccharine added. This tended to make them unreliable and if they were ever right it seems to be more luck than judgment. The virtue of the new figures provided by the Office of Budget Responsibility is that they are independent and the chairman, Robert Chote, has been critical of the Conservatives in the past. This gives the latest picture greater credibility.
It suggests that the economy can grow at over two per cent for each of the next five years with rising employment and inflation under control. The engines of growth will be business investment and exports. The former is helped by the more certain political climate while the latter is aided by our flexible currency. It is to the Conservatives’ credit that they never wanted to join the Euro and that public spending is coming under control.
It is always worth remembering that government borrowing is merely taxation postponed. It is money that might otherwise be available to business or spent by individuals. It also has to be raised in international markets and the shocks in Euroland prove that this is not always easy. Thus, George Osborne may deserve some credit for taking early action to get the ship of state back on an even keel.