The focus of the UK economic debate of recent weeks has been the credit crunch and the evolution of Northern Rock. Now, however, the Government’s plans for fiscal policy will take centre stage. This week’s Budget provides the Chancellor with an opportunity to set out a new approach for government spending, based on the notion of a long term sustainable public spending policy. If this opportunity is missed, it will leave the way clear for the Opposition parties.
A new report published today by the independent think tank Reform argues that the programme of public spending increases begun in April 1999 has been unsuccessful. This period of public sector expansion – the largest and longest spending increase of the last 35 years – has failed to achieve its stated aims; has acted as a weight on the private sector, damaging long-term economic growth; and has left the UK ill-placed to face the challenges of the coming years.
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