Dr Huw Macartney, Associate Professor in Political Economy, explores the politics of the Spring Budget.
Jeremy Hunt has used the “fiscal ceiling” fallacy to justify modest cuts now with the unspoken promise of more fiscal pain down the line. Some would say that it is easy to feel slightly sympathetic for Hunt. Certainly, on paper, his room for manoeuvre is significantly lower than most other chancellors in recent memory. And it would be easy to blame post-Covid inflation and the energy crisis – exogenous factors – for the dilemma Hunt is now facing.
But we need to recall that the situation Hunt now finds himself in is the result of more than a decade of toxic economic decisions that have prioritised fiscal constraint – AKA “austerity” – over spending. Moderate and planned increases in public spending would have left the UK economy in a far healthier situation. And the “fiscal ceiling” – which is not, by the way, some fixed, abstract number – would also have been more forgiving.
The sad news however, is that whichever party wins the next election is going to be living with the consequences of these poor Tory decisions for some time; and childcare seems to be the next part of the welfare state to be dismantled as a product of these atrocious Tory policies.
Associate Professor in Political Economy
Dr Huw Macartney is a political economist whose work is broadly concerned with the politics of banking and financial services.
