I Have No Quarrel with Tim Besley Save for that Line About How There Is a Compelling Case to Start "Fiscal Consolidation" in the 2010-11 Fiscal Year
That is all...
Tim Besley emails:
You referred to our letter on a blog that I saw and there seems to be a fair bit of misunderstanding around – as if we are arguing that we are hell bent on choking off recovery. But we explicitly recognize that the timing of measures of measures have to be sensitive to economic developments and the fragility of the recovery. This is a letter about the medium term and is based on the concern that there could be insufficient political will to tackle our structural deficit over a parliament. What we are suggesting is around a further 2.5% of fiscal tightening over five years compared to the government’s stated intentions. But equally importantly, this needs to be backed with proper independent evaluation of fiscal forecasts (our final point) something which we do not have in the UK. As for the near term, there is scope for serious tax reform and reforms to public services which should be carried out at the beginning of a parliament to ensure that the plans look credible and the burden of adjustment is shared fairly. (I am currently on a tax review commission – the Mirrlees review – which is about to report and will make clear just how much scope there is for improving the fairness and efficiency of our tax system and in the near term there should be scope for reforming the system so that consolidation is less painful when it is phased in over three years.)
I hope that this makes clear where we are coming from.
