The impact of a hung parliament on the UK economy


Very tactful; the implications of the ‘counter-intuitive’ point might be that a LibDem/Labour combination might do better than any other conceivable government on reducing the size of the public sector — which I find a step too counter-intuitive!If you recommend a potential voter should be looking for a party which is being honest about the scale of the financial problem, you probably imply either voting UKIP (my impression is that they have talked a bit about the size of the problem) or not voting at all.Another possible implication of a hung parliament might be the probability of another general election soon; which might or might not deliver an overall majority to a single party.

I must admit, I did not have in mind a Labour/Lib Dem coalition when I was saying most of this.

Perhaps if all parties involved were deficit hawks, the positive coalition outcome that Dr Booth tentatively outlines would ensue.But with the Conservatives and Lib-Dems wobbly on the issue of ‘swingeing cuts’, and no upside from tax increases—with Laffer curve revenue attenuated, so that only cuts have perceivable long-term benefits—a coalition government will likely lead to half-measures and acrimony.More probably, in lieu of a majority Conservative government—and even then—only market and ratings agency revolt will have sufficient impact to focus the minds of improvident politicians.

It is true that I did suggest there might be a positive outcome from a coalition but my main message was that there was unlikely to be the really positive outcome we need even if we did not have a coalition!

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