Public borrowing high because government's plan is flawed
- Published on Wednesday, 22 August 2012 12:21
- Posted by Scott Buckler
Responding to the latest ONS figures, Philip Booth, Editorial and Programme Director at the Institute of Economic Affairs, said..
"The government's approach to cutting the deficit has ignored all the economic evidence and is not working. The front-loaded tax increases have failed to generate sufficient revenue to reduce borrowing. This is exactly what should have been expected given the high level of taxes in the UK.
"At the same time, the coalition back-loaded spending cuts - even though government spending had risen to half of national income by 2010. Government spending is currently rising at twice the rate of inflation and widening the deficit.
"Clearly, the government must reduce spending rapidly in order to ensure both a credible deficit reduction plan and tax cuts before the end of this parliament. Other supply-side measures are also essential to raise economic growth without which deficit reduction will be that much more painful."