Can politicians be trusted to do it properly?

“UK markets have slumped as the uncertain outcome of the general election unsettles investors”. That’s the general tenor of mainstream press commentary today.

It’s wrong. As our economics writer points out today, gilts are no lower today than they were a month ago. Yes, shares are down – but not by as much as they are in other countries. Sterling might have fallen against the dollar, but it’s still comparatively high against the euro. Much as it might irk our self-important politicians to hear it, the rest of the investing world isn’t that interested in their partisan bickering.

Of course, that might change if their ineptitude lands us in a pickle as bad as Greece’s. Could it happen? With immaculate timing, a report from economics consultancy Lombard Street Research* arrived on my desk this week, discussing the lessons from a century of spending cuts.

It explains that the single biggest round of cutbacks to UK public expenditure in modern times was that outlined by a committee established by Lloyd George in 1921 and chaired by Sir Eric Geddes. It became know as the Geddes Axe because of the zeal with which its members (aside from Sir Eric, they were all businessmen, not politicians) went about identifying cutbacks.

Sir Eric proposed cuts of £100m, but the Cabinet only had the guts to sanction £64m of that in the 1922 Budget. They weren’t popular. Later that year, the coalition government of Lloyd George collapsed. Several subsequent governments that found themselves needing to cut spending suffered a similar fate – most obviously, Ramsay Macdonalds and Jim Callahan’s.

Mindful that cutting spending hard is the electoral equivalent of signing your own death warrant, can politicians be trusted to do it properly? We’ll soon find out.



The FT’s Money blog is a forum for the latest news and insights from the UK’s personal finance scene. Matthew Vincent, the editor of FT Money and his team of reporters will upload their views and insights on what’s happening in the industry and how this affects people’s finances.

This blog is no longer active but it remains open as an archive.

Sign up for our daily email
Follow on twitter

About our bloggers

Lucy Warwick-Ching is the FT’s new Money Online Editor and has been a UK Companies reporter covering tobacco, pubs and leisure companies as well as the deputy editor on House and Home.

Matthew Vincent is the FT’s Personal Finance Editor and was previously the editor of Investors Chronicle, where he also devised the award-winning online video The Market Programme, and produced the BBC-FT standalone magazine ‘How to be Better Off’. He presents the weekly FT Money Show audio podcast, and previously worked on the BBC TV programmes Short Change and Pound for Pound.

Alice Ross is deputy personal finance editor of FT Money. She specialises in pensions, investments and investment trusts. Alice joined FT Money in April 2008 - prior to that she was deputy editor at Money Management magazine.

Ellen Kelleher has been a personal finance reporter in the UK for close to four years. Before arriving in London, she worked in the FT's New York bureau where she covered the insurance sector.

Steve Lodge is a personal finance reporter on FT Money specialising in savings.


Josephine Cumbo has written about all aspects of personal finance but currently specialises in insurance. She also covered company news for FT.com. Prior to working at the FT she was a news reporter for the ABC.

Tanya Powley is a personal finance reporter on FT Money specialising in mortgages and the housing market. Tanya joined FT Money in November 2009 after working in Australia covering personal finance for the Australian Financial Review and its sister magazine Asset. Prior to that, Tanya wrote about mortgages for UK trade newspaper Money Marketing.

Jonathan Eley is editor of Investors Chronicle, and has been with the title for ten years. Before that he worked for newswires and trade journals in London, New York and Hong Kong.

Money Matters: a guide

Comment: To comment, please register with FT.com, which you can do for free here. Please also read our comments policy here.
Contact: You can write to the Money Matters team using this email format: firstname.surname@ft.com
Time: UK time is shown on posts.
Follow: Links to the blog's Twitter and RSS feeds are at the top of the page.
FT blogs: See the full range of the FT's blogs here.