The choice isn't about waiting for a robust recovery

Letter to the Financial Times (unpublished), 19 February 2010 

Sir,

Do not your distinguished professors (First priority must be to restore robust growth, 19 February) lack political judgment?  They write that there is no disagreement on the need to cut public expenditure adding "But the timing of the measure should depend on the strength of the recovery". 

In normal times that would be true.  The judgment is whether we live in normal times.  Likewise, while we may assert that our economic policy should not be determined by the bond market, the plain, hurtful truth, is that it is.

Long-term interest rates are beginning to rise, so damaging the recovery, despite the fact that the Government has printed in excess of £200bn of funny money to buy its own debt, and further has liaised with the FSA to compel banks to buy more government debt.  The Governor of the Bank of England has recently also said that we may need to print more funny money.

The reason is obvious.  We are now out on our own with the bond market deciding who and at what price Government debt might, or might not, be bought. 

The choice isn't about waiting for a robust recovery - if only we could.  The judgment is whether we should risk the catastrophe that will follow a down-grading of our credit rating, against the undoubted damage that further cuts in public expenditure in the current year will do to employment proposals.

Frank Field MP

House of Commons, SW1

Date added: Friday 19th February 2010
Latest updated: Monday 26th July 2010