Today, George Osborne had a choice. Growth prospects have evaporated, and tax revenues
along with it. Should he reopen the 2010 Spending Review and cut the spending totals? Or stick with those totals, and finance this with extra debt? He chose the latter. And I think, on balance, he
was right to do so. Credibility is the most valuable currency in this eurozone crisis, and Osborne said it was a fixed five-year plan. He chose more debt over less certainty, and it looks today
like the markets believe he chose correctly.
But all this comes at a cost. The government will now run deficits higher than those which Labour proposed. Certainly, had Labour been confronted by evaporating growth it may have had to choose even lower spending or even higher borrowing.
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