Government officials told the FT over the weekend that today’s bank lending paper would be “very green” – essentially laying out a set of problems rather than solutions. And so it has proved.
The first 12 out of 39 pages deal with “context”: basically facts we already knew. It is not until page 13 that we get any concrete policy suggestions. And even then, they are couched in very cautious terms. Read more
The next chancellor’s spending cuts will have an impact on growth. One of the worries in the Treasury is lower than expected growth will then up the ante on the cuts required to tackle the deficit. It is an horrible negative feedback loop.
If you want a sense of the scale of the challenge, take a look at Chris Giles fascinating piece on the impact of the deficit reduction plans using a replica of the Bank of England’s economic model. Read more