Wednesday, October 20, 2010

Osborne will escape public wrath if Labour lets him win the blame game | Jonathan Freedland | Comment is free | The Guardian

If Labour's spending was so wildly out of control, why did the Tories promise to match their plans, pound for pound, all the way until November 2008? Why didn't Osborne and Cameron howl in protest at the time?

Could it be because things were not actually that bad? A quick look at the figures confirms that, until the crash hit in September 2008, the levels of red ink were manageably low. The budget of 2007 estimated Britain's structural deficit – that chunk of the debt that won't be mopped up by growth – at 3% of gross domestic product. At the time, the revered Institute for Fiscal Studies accepted that two-thirds of that sum comprised borrowing for investment, leaving a black hole of just 1% of GDP. If the structural deficit today has rocketed close to 8%, all that proves is that most of it was racked up dealing with the banking crisis and subsequent slump – with only a fraction the result of supposed Labour profligacy. After all, even the Tories would have had to pay out unemployment benefit.

Interesting article from Jonathan Freedland. Basically saying that the Government is strongly blaming Labour for the mess, so they do not get blamed, but in actual fact it was the banking crisis that is the main culprit.

"it is a question of fact that we entered this financial crisis with low inflation, low interest rates, low unemployment and the lowest net debt of any large G7 country" - Ed Balls

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