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The Independent on Sunday today says that "the Government is to call for an end to what it describes as an "it's not my fault" culture of excuses, which has allowed 120,000 "troubled families" to avoid taking responsibility for their own lives." Eric Pickles is quoted as saying the programme will be "more forceful in language, a little less understanding".
[This article appeared in the Independent on 10 June 2012]
Two weeks ago, I wrote this:
Chris Giles' FT piece here argues essentially that the political debate focuses too much on fiscal policy; and that given the uncertainty about the impacts past and future, of fiscal policy, economists should refrain from taking sides in this debate. I think that while there is much in Chris' piece that I agree with, ultimately his conclusions are confused at best, and damaging at worst.
GDP figures today were revised down to -0.3%. As I've said before, small quarterly movements of this sort are largely irrelevant to the broader picture. What was initially a reasonably strong, albeit patchy, recovery stalled in the autumn of 2010; since then there has been essentially no growth at all.
[Update. David has responded here. His post simply ignores the second-to-last para below. which addresses the substantive point. At this point, I really don't know whether it is because he's dug himself into a hole and doesn't want to admit it, or because he genuinely doesn't understand the government's intertemporal budget constraint - a standard identity, taught in any decent graduate macro or public finance course, if not before.].
When I'm asked in interview or articles to sum up concisely why I think the government should change course on fiscal policy, I usually say something like this:
[This article originally appeared in the Independent here].
My Guardian article, here.
Much of the discussion about today's GDP figures has focused on the "surprise" fall in construction, as if this had somehow come out of nowhere and was nothing to do with government policy. And perhaps the figures will be revised. But more broadly, it is hardly surprising that the construction industry is having a hard time when the government has taken a deliberate decision to slash public sector investment - down 25% last year, as Tuesday's ONS figures showed.
[This piece appeared first in the Independent here]
[Figures in this paragraph, and chart, updated April 19, 2012]
As recently as 2008 there were fewer than 6,000 18-24 year olds who had been on Jobseekers' Allowance for more than a year. That number is now 55,000 - nearly ten times as many. This is not just the recession and its aftermath: after falling back somewhat in the year to May 2011, the number has more than tripled, as shown in the chart below. The same is true for the proportion of claimants who have been claiming for more than a year.
[Updated 11 April 2012 with this preface]
I still seem to have difficulty getting across the very simple point that the historically low level of long-term interest rates in the UK (gilt yields) reflects primarily protracted economic weakness rather than, as the government persists in asserting, confidence in the government's economic strategy. Maybe this chart will do the trick:
Last week representatives of the European Commission came to see me and colleagues at NIESR to discuss the economic prospects for the UK. We had a sensible discussion, during which time I expressed my view that slowing fiscal consolidation would boost growth and employment without posing any significant risk to fiscal credibility, and that in this respect the Budget was a missed opportunity.