COMMENT: The problem with George Osborne’s debt target
Sep 2012 14

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.

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