Last week’s grim news that the economy is flatlining causes two headaches for the chancellor. First, his tentative deficit reduction plan is losing credibility by the day. Already he has postponed the date when he will balance the budget to the middle of the next Parliament. But his hopes of closing the UK’s unsustainable deficit are based on growth returning to the economy.
But secondly, growth is desirable on its own terms. Even without a colossal budget deficit, any government with a hope of survival seeks to ensure the population is richer on re-election day. The coalition should have thought through a strategy for growth in its first weeks of office. If growth is to be a centrepiece of its strategy, a much bolder approach is needed now.
Read Mark Littlewood's five steps to boost the economy here.