Douglas Carswell's Blog

The Treasury isn't working

So, where’s the growth? 

Interest rates are low, public spending is actually rising and the Bank of England is printing money. In other words, we've been doing all those things we keep being told would give us growth. 

Except the economy continues to more or less flat line.   

Perhaps it is time to acknowledge that successive British governments have now tested to destruction the idea that growth can be achieved by spending more money and manipulating interest rates. 

If low rates and public spending produced wealth, we’d be riding a wave of prosperity. Instead, we’ve run out of money and are weighed down by debt.

We need to ditch the orthodox Treasury opinion that landed us in this mess. 

Instead of using fiscal and monetary stimulus to try to manage demand, the purpose of fiscal and monetary policy ought to be to keep our fiscal and monetary house in order. Radical, eh?   

If government wants to stimulate economic activity, it needs to stop obsessing about the demand side. Ever greater over consumption is no way to deal with a debt crisis. Try the supply side instead.

But where are the Treasury ideas for supply side reform?  Indeed. A few handouts to “green” businesses and other favoured industries is not supply side reform. It’s corporatism.

Treasury thinking on growth - like Treasury thinking on Eurozone fiscal union - is not yet where it needs to be.  Too much comfort zone, not enough verve.

Until the Treasury raises its game and produces a coherent agenda for supply side reform, the economy is going to go nowhere very fast.

Back to all posts