Cossy
MaizieD
First, that it is through growth and only through growth that we can sustainably resource strong public services, raise living standards, and compete internationally.
I think that she has got it the wrong way round here. funding (resourcing) public services will promote this 'growth' that she is anxious for, and only then will private investors be interested in putting their money in. When they can see that there is some profit to be made from the domestic economy. Waiting for growth from the promised long term investment will, IMO, take a while to work through into increased domestic spending to stimulate the provision of goods and services, whereas a boost to public services would be more immediate with the need for better wages,and employment in much needed repairs to the infrastructure.
So let me be clear about the rules which will bind the next Labour government. That the current budget must move into balance, so that day-to-day costs are met by revenues. *And that debt must be falling as a share of the economy by the fifth year of the forecast, creating the space to respond to future crises.
By 'revenues' I assume she primarily means taxation, but that's not going to happen if services are still in their current state. There is not a lot of money around to be taxed...
As to the 'debt', (or does she mean deficit, the gap between expenditure and revenue?) that really is irrelevant at this stage, (because no-one who 'owns' the 'debt' actually wants their money back). It can only be narrowed by an increased tax take, which isn't possible unless public services get more money, or taxes are raised, (which gives people even less money to spend), and, dare I say it, reducing interest rates to make it less costly to service.
Government has to spend first, before it can tax, raising taxes first just impoverishes people. That is a key principle of MMT which has empirical evidence on its side...
Let me be candid. We cannot continue with the short-termist approach that disregards the importance of public investment. But we also cannot ignore the pressing need to rebuild the UK’s public finances, to increase our space to respond to future shocks. That is why our fiscal rules differ from the government’s. Their borrowing rule, which targets the overall deficit rather than the current deficit, creates a clear incentive to cut investment that will have long-run benefits for short-term gains. I reject that approach, and that is why our borrowing rule targets day-to-day spending. We will prioritise investment within a framework that would get debt falling as a share of GDP over the medium term.
Sorry, but I see more austerity in the offing...My understanding of that first statement is we need to grow our economy first before we spend more money on public services as public services are not income generating. She doesn’t seem to explain how this will actually happen. It’s really clear that Labour have to keep defending themselves in terms of the economy because they are constantly vilified for previous spending over a decade ago.
That is my understanding, too, Cossy and it's bonkers. As I explained in my post.
The money that the government puts in to public services is what will give the initial boost to growth. I have explained why many times on this forum. Once the money is there the increased revenue will follow because everything you buy is taxed, as is business income.
And, until the economy shows signs of growth we won't get private investors, new businesses or whatever because they'll only invest if they can see a marketplace full of people with money to spend. Which they don't at the moment..
