David Cameron and the UK’s Office for Budget Responsibility may have their differences of opinion on the negative impact of fiscal austerity but at least they appear to see eye-to-eye on the effects of monetary policy. Since the Conservative-Liberal Democrat coalition came into office in May 2010, the OBR has persistently projected a return to decent economic growth thanks to the supposed benefits of monetary stimulus, a view shared by the Bank of England and, indeed, by the government’s political strategists. Austerity might be painful but, with thanks to monetary stimulus, the sunny uplands were supposed to be within reach long before 2015, the year in which the coalition reaches its sell-by date.
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