The economy is not growing strongly | Think Left

One of the most widely repeated falsehoods about the British economy is the assertion that it is growing strongly and that the crisis is over.

This is not borne out by even a perfunctory economic analysis but it serves a political purpose.

In the first instance, the assertion was important in order to blunt any criticism of renewed Tory austerity policies, which will begin again earnest with the Comprehensive Spending Review in December.

Now that Jeremy Corbyn has won the leadership of the Labour Party the same falsehood is pressed into slightly different service- with the idea that his policies represent a threat to the current recovery, or are at least unnecessary.

In reality, the extremely limited upturn in output is already giving way to renewed weakness. UK industrial production and manufacturing fell in July.

Source: The economy is not growing strongly | Think Left

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4 thoughts on “The economy is not growing strongly | Think Left

    1. Martin Odoni

      They’re two completely separate ‘spreadsheets’. The debt will almost always go up instead of down, irrespective of whether GDP is growing. A ‘growing economy’ is just a sign that the amount of activity within it is increasing. Growth can even be a consequence of *increasing* the National Debt e.g. investing extra money in industrial sectors that are struggling.

      The deficit/surplus is what governs whether the debt is going up or down. The deficit/surplus is the difference between the amount the Government takes in in taxes, and the amount it spends. If the spending exceeds the tax-receipts, there is a deficit, usually covered by borrowing money, if the tax-receipts exceed the spending, there is a surplus. So far, Osborne hasn’t come anywhere near to establishing a surplus, so the debt is still going up. (This is not to say that it would be a good thing if he did generate a surplus, but that’s a separate subject. Rightly or wrongly, it is what he is aiming to do.)

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