Osborne had been hopelessly wrong in his reaction to the financial crisis, whereas Brown got it right, both in his leading role in the proposals for bank recapitalisation and his championing of the G20 fiscal stimulus agreed at the London summit of early April 2010. Brown knew that it was a huge mistake to begin to withdraw the fiscal stimulus before recovery was well established. He was aware of the US precedent in the mid-1930s. He knew that to embark on a policy of austerity was the last thing required, but also the best possible way to dampen the animal spirits of entrepreneurs and induce a collapse of confidence. So did Ed Balls. In a memorable speech in August 2010, Balls acknowledged that there should be a deficit reduction plan, “but only once growth is fully secured and over a markedly longer period than George Osborne is currently planning …Just think if Clement Attlee’s government at the end of the second world war had decided that the first priority was to reduce the debts built up during the war – there would have been no money to fund the creation of the NHS, no money to rebuild the railways and housing destroyed in the blitz, no money to fund the expansion of the welfare state.
Posted on: Sat, 29 Nov 2014 14:35:46 +0000
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