Read my lips: no new tax cuts

There are still rumours in Westminster that David Cameron will cut taxes to stimulate the economy, but the speech he gave to the Canadian parliament on Thursday rather scotches this idea. Here’s what jumped out at me

1) No Obama-style deficit-financed tax cuts, please, we’re British
. “The economic situation is much more dangerous and the solution for most countries can not be simply to borrow more. Because if the government doesn’t have the room to borrow more in order to cut taxes or increase spending, people and markets start worrying about whether a government can actually pay back its debt. And when this happens confidence ebbs away and interest rates will rise, hitting people with mortgages, and hitting companies that want to borrow to invest.”

Britain “doesn’t have room” to borrow more in order to cut taxes, he says. Why not? Because we’re already borrowing as much as the markets will allow (runs his logic) and if we ask for more then interest rates will rise.