When rebalancing goes bad: Why the chancellor's deficit reduction plan threatens the economic recovery
Article
This short briefing explains the four economic sectors that make up the UK's fiscal balance sheet, and identifies some dangerous assumptions lurking in the chancellor's plans for deficit reduction in the next five years.
'If the next government tries to follow the chancellor's stated deficit reduction path, one of two outcomes is likely. Either it will succeed in the short term only because the household sector takes on debt at a faster pace than it did before the financial crisis – with the associated risk of a house-price bubble and burst, followed by a recession and ultimately a new blow-out in the government deficit. Or it will fail even in the short term because the necessary adjustment in other sectors occurs only through weaker growth. Neither of these appears to be a sustainable basis for economic recovery.'
Tony Dolphin
Related items
Dr Parth Patel on BBC Politics Live - July 2024
IPPR's Dr Parth Patel on BBC Politics Live discussing the new Labour government, Covid, migration and international affairsA ‘mandate’ to deliver: Who voted Labour and what do they want?
This year’s general election saw the Labour party achieve a historic landslide, winning 218 new seats and a comfortable majority in the House of Commons.Half of us: Turnout patterns at the 2024 general election
One-half of adults in this country voted at the 2024 general election, the lowest share of the population to vote since universal suffrage.