Q: Why will George Osborne miss his debt target?
A: The Government is spending a lot more money than it is taking in taxes.
Q: Why is the Government spending a lot more than it is taking in taxes?
A: Jonathan Jones answered this one yesterday. In short: disappointing growth means that debt needs to be lower to meet a Debt/GDP target, increases spending on benefits and reduces both direct and indirect tax receipts.
Beyond that, things get a lot more complicated and controversial. I won’t get into the debate over supply-side reform versus Keynesian economic stimulus now. That debate has been covered at length elsewhere, particularly in the final report of the 2020 Tax Commission.
Maybe the problem isn’t just the attempts to meet the targets. Maybe there is also something wrong with the targets themselves. The establishment of the Office for Budget Responsibility means that progress against targets is now assessed in a more credible way.
Comments
Join the debate for just $5 for 3 months
Be part of the conversation with other Spectator readers by getting your first three months for $5.
UNLOCK ACCESS Just $5 for 3 monthsAlready a subscriber? Log in