Writing for the Spectator’s Coffee House our Chief Executive Matthew Sinclair looks at why George Osborne’s spending targets are in danger of becoming a bit of a joke.
Q: Why will George Osborne miss his debt target?
A: The Government is spending a lot more money than it is taking in taxes.
Q: Why is the Government spending a lot more than it is taking in taxes?
A: Jonathan Jones answered this one yesterday. In short: disappointing growth means that debt needs to be lower to meet a Debt/GDP target, increases spending on benefits and reduces both direct and indirect tax receipts.
Beyond that, things get a lot more complicated and controversial. I won’t get into the debate over supply-side reform versus Keynesian economic stimulus now. That debate has been covered at length elsewhere, particularly in the final report of the 2020 Tax Commission.