(Original post by James82)
But, with this government GDP is up in both cash and real terms since they came to power, as for this latest minor recession how do you know that we won't recover the lost GDP? I suspect we will recover it a lot quicker than 4 years.
I agree, but what would the real cost to the economy be? A higher deficit? High inflation? High interest rates?
Well, let's see how that works out shall we? I suspect that France will either go to the wall or Hollande will actually not turn out to be as anti-austerity as he professes.
The economy has grown under this government, both in cash and real terms. It still costs the government more to employ somebody in the public sector than it does to pay them benefits, so spending money is false growth, it would have to be funded by borrowing. Increasing borrowing would just push up inflation, interest rates would have to be raised to control it. Just look at Labour in the late 70s, by using a similar plan to the one you are advocating inflation was running at 25%, the Tories got in and had no choice but to raise interest rates to control spiralling inflation. Everyone remembers the high interest rates because of the effect on their mortgages, but seems to forget about the inflation under Labour. Without those high interest rates we'd have spiralled into a situation similar to Zimbabwe or the Weimar Republic.
Who doesn't want the economy to grow? The difference is I would rather it was done slowly with real growth, rather than papering over the cracks, borrowing more money and achieving high short term growth just to push the problem down the line and make it even bigger, we've been there before.
I suggest you do some research and learn the difference between deficit and debt, the deficit has been reduced, if it were anywhere near £800b, let alone £1,600b, we would be lining up the ports and airports to escape armageddon.
Forget Italy, they have appointed a pro-austerity government, I wonder why they have been out of the news for the last few months, could it be that that things have started to get better?
As for France, we'll have to wait and see, but as I said I suspect Hollande will turn out not to be quite as anti-austerity as he claimed in his manifesto, if he is then it will be interesting to see the fall out.
You keep thinking that.