The austerity debate: Paul Krugman and me vs. Bridget Rosewell and Stephen King
On October 15, I spoke in a debate at the Houses of Parliament entitled: "Time for a radical rethink? The economics of deficit reduction".
The debate was organised by Professor Lord Richard Layard, by kind permission of the Speaker and Lord Speaker (who introduced the debate). It was chaired by Evan Davis. I joined Professor Paul Krugman of Princeton University, and Nobel Laureate in Economics, in arguing that premature fiscal consolidation in the UK had been based two key misconceptions: that in the absence of accelerated deficit reduction, bond markets would panic; and that fiscal consolidation would have little or no negative impact on growth. Bridget Rosewell, of Volterra Partners, and Stephen King, Group Chief Economist of HSBC, argued in contrast that austerity was a necessary corrective to the large debt overhang, both public and private, resulting from a financial bubble in the late 2000s and the resulting crisis.
A summary of my argument appears in the Spectator here. Excerpts of the debate, and a follow up discussion between me and Bridget Rosewell, featured on the Today programme [about 15 minutes in] on the morning of 16th October. Here is a nice narrative piece by Russell Lynch in the Evening Standard.
Here is the full recording (audio only) of the debate (it is about 1 hour 45 minutes).