Labour’s Spending Causes More Harm Than Good
Labour’s increased spending after the credit crunch actually harmed the economy rather than boosting it, according to a centre-right think tank.
A report by the Institute of Economic Affairs found that stimulus measures pursued by Western governments in response to the economic crisis did not work.
Shadow Chancellor Ed Balls has repeatedly called on the Government to soften its deficit reduction plans and embark on a ‘Plan B’, which would include more public spending in an attempt to boost growth.
But the institute’s study said Plan B would be disastrous for the British economy, and that all Western economies needed drastic fiscal and tax reform if they were to overcome their sovereign debt crises.
Mark Littlewood, director general of the Institute of Economic Affairs, said: ‘We must resist the calls of those who say that one last, big spending push could get the economy back to meaningful growth.
The opposite is true.
‘Many Western economies might well be tipping back towards recession partly because of these giant fiscal packages that were enacted in 2009, and the coalition Government must resist calls for any Plan B that involves more government borrowing and spending.
‘The Government must be firm on deficit reduction – in fact it should go a lot further, and should look to robust supply-side reform to boost growth.’
The study concluded that the negative effect of Labour’s stimulus package in 2009 might even be being felt now, and that the UK might be experiencing faster growth if Labour had not increased spending.
Category: Credit Crunch, News
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