by Katy Clark

Public spending is the way to overcome the economic mess that bankers’ greed created. In an extensive report, Dave Hall of Greenwich university business school nails the lie that cuts are inevitable. The fair way out of this crisis is to restore sustained economic growth. The empirical evidence contained within Dave Hall’s report, Why we Need Public Spending, provides the weapons that our movement needs to win the battle of ideas. There are no economic justifications for these cuts.

During the last Parliament, I voted against our government when it introduced legislation to cut the deficit in half by 2010. I was not willing to vote for such massive cuts and thought that having a fixed timetable was far too rigid, took no account of what future economic challenges we might face and was largely silent on growth. I was blissfully unaware that a debate supporting my concerns was taking place around the cabinet table. Ed Balls was leading the charge against setting a timetable while also arguing that we needed to prioritise policies that deliver growth.

He was right to do so. If history has taught anything, it is that you don’t cut public expenditure during a period of sluggish growth. We need look no further than the Republic of Ireland to see this. During the last two years, a series of emergency budgets have been introduced to supposedly combat the effects of the economic crisis. They each brought additional cuts that went further and further into the bone. Yet, their economy is once again on the brink of recession, having contracted during the last quarter. The real spectre haunting us is the possibility of a decade-long depression and a return to the disastrous economic failures of the 1930s. (more…)