Some decent articles appeared in the run up to the long-awaited Comprehensive Spending Review (CSR) which collectively throw light on both the politics and economics of it all. First up, Jonathan Freedland in The Guardian, writing about how Labour really needs to take on the Coalition’s attempt to pin the blame on them for the ‘economic mess’, and that the deficit is all the fault of profligate Labour spending. According to the Budget 2007, the structural deficit stood at just 3% of GDP before the recession struck; now it is 11%. In other words, prior to the recession it was relatively low by historical standards – as Ed Balls pointed out earlier in the summer, Britain went into the recession with ‘the lowest net debt of any large G7 country’, and this is a matter of fact not interpretation. Indeed, using the Treasury’s figures, the accusation that Labour wildly overspent in office just does not add up: public spending during the previous period of Tory rule was higher in all but 4 of the 18 years they were in office than at any point during 1997-2007 (the four years in question being the boom years after the ‘Big Bang’ deregulation of the City, that period satirised by Harry Enfield’s ‘Loadsamoney’, 1988-1991).
This is the basis for the first of Freedland’s two killer points. If Labour’s public spending was so wildly out of control, why did Cameron’s Tories (back in his hug-a-hoodie, quality-of-life days) promise to match Labour’s spending plans almost pound for pound? The answer is that clearly it wasn’t. This means, of course, that the size of the deficit now is largely down to the recession and the fiscal stimulus package that prevented disaster turning into catastrophe. Without it, it is likely that recession would have turned into depression, but somehow the Coalition spin machine has successfully managed to make it appear that the medicine was the disease.