The Express, October 27, Professor Patrick Minford
We are about to have yet another Conservative Prime Minister who will need to plot a policy course over the coming two years. Before anything is planned, however, we need to understand just why the programme on which Conservative members elected Liz Truss came apart when put into practice.
The Truss government policies used the concept of long-term sustainability to replace the short-term fiscal rules previously in use; this was a new approach which permitted both tax reform and active fiscal policy. The concept was correct; fiscal solvency commits a government to ‘balancing the books’ in the long term. In practice, this translates into projecting the debt/GDP ratio as falling over the next decade or so to a sustainable and moderate level.
However this has to be demonstrated to occur with the planned policies being followed; whatever assurances are given about the future, demonstration with plausible arithmetic is necessary.
Click here to read the piece in full.