Spending review: What the economists think

Prof Philip Booth writes for The Guardian

There are no great surprises in the CSR. However it is a bit worrying that the cuts are really rather vague and the promised spending increases are very specific. Will the cuts actually be delivered? At the same time, there could have been some cuts made that have been specifically ruled out – the winter-fuel allowance, free TV licences, child benefit for 16- to 19-year-olds and so on. Such cuts could have generated substantial tax cuts for the lower paid and helped the supply side of the economy.

Indeed, the debate must now move on to the supply side of the economy as the private sector must be able to grow to take the space which the government now occupies. The signals there are not good. The government wants to take the "maximum sustainable revenue from the financial services sector", the minimum wage is rising and the full rate being extended down the age range, and we have new maternity leave provisions from the EU which will cost businesses £2.5bn. We now need a supply side revolution!

Read the article on The Guardian website.

 

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