GEORGE OSBORNE’S Autumn Statement (Echo, Nov 30) revealed the voodoo economics of the last 18 months for the fantasy it has been. All economic history, theory and practice screams that you cannot cut your way out of a recession.
A credible debt reduction strategy depends on growth.
David Cameron claims that the cuts strategy ensures we do not follow the path of Greece into insolvency, but cuts was their strategy and they ended up bust.
We are now committed to excess borrowing of £158m over this Parliament as a direct result of Government cuts raising welfare payments and slashing tax returns.
Pretty soon, bond markets will catch on that confidence cannot be separated from economic performance. As our economy shrinks, so Government income will decline and borrowing will rise. It is the size of our economy that will determine the deficit, not the other way round.
Taking from tax credits and imposing extra public sector pension contributions, that amount to a three per cent increase in taxes, and burying that in the Treasury has the immediate effect of reducing demand in the economy.
Rob Meggs, Hartlepool.
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