The UK economy

Jonathan Portes in The pasty tax could pay for a £30 billion infrastructure programme: four charts show why history will judge us harshly suggests that the UK Government is getting it wrong on macro economic policy:

When I'm asked in interview or articles to sum up concisely why I think the government should change course on fiscal policy, I usually say something like this:

    "with long-term government borrowing as cheap as in living memory, with unemployed workers and plenty of spare capacity and with the UK suffering from both creaking infrastructure and a chronic lack of housing supply, now is the time for government to borrow and invest.  This is not just basic macroeconomics, it is common sense. "

He concludes with:

Twenty, or fifty, years from now, economic historians will look back at the decisions we are taking now. I cannot imagine that they will be anything but incredulous and horrified that - presented with these charts and figures - policymakers did nothing, international organisations staffed with professional economists encouraged them in their inaction, and commentators and academic economists (thankfully, few in the UK) came up with ever more tortuous justifications.  In Simon Wren-Lewis' words, they will ask  why "a large section of the profession, and the majority of policymakers, appeared to ignore what mainstream macro [and, I would add ,basic common sense] tells us".   Their judgement will be harsh.

Eating the Seed Corn - Paul Krugman's take on the matter.