GFTU BGCM 2019 Minutes

Government, despite what the Tories are putting out as propaganda now,

should invest in future generations?

LARRY ELLIOTT: Yes, obviously. If you go back to 1945 or even 1918, the national

debt as a proportion of GDP was something like 200%. It was much, much

higher than it was after the recession of 2009. So you had much, much higher

levels of debt and yet that debt gradually dwindled away, because the economy

grew in the 1940s, 50s, 60s and 70s. It grew sufficiently fast so that the debt

went up in nominal terms, but actually as a proportion of GDP it came down

steadily until it was roughly at about 40% by the time Labour took over at the

end of the 1990s. We have had incredibly low interest rates for 10 years. To

me, it beggars belief that the Government has not decided to invest more in

public infrastructure during that period when interest rates are so low.

Governments can borrow at rock bottom levels. Interest rates are at rock

bottom levels. They can borrow even more cheaply. They could have virtually

borrowed for nothing for the last 10 years. So all the stuff about absurd levels

of borrowing or dangerous levels of borrowing really, really do not wash with

me. The Government, not only did it not borrow, it did the opposite thing

between 2010 and 2015, it actually cut public infrastructure, cut public

borrowing with disastrous results for the economy. The better course would

have been to have borrowed more money, spent it on infrastructure projects,

put people back to work and that would have grown the economy and would

have shrunk the deficit. In fact what the Government did was they shrank the

economy and increased the deficit. There is absolutely no reason in economic

theory which suggests that there is some sort of magic level above which the

economy is going to go into a tailspin.

So, yes, I totally agree with you. But that was part of the Government’s

rhetoric. It was as much a political imperative as an economic imperative in

2010. What the Tories really badly needed to do was to pin the blame for the

recession and the financial crisis on Labour’s overspending and it did that by

saying we are borrowing too much and we are actually passing this on to future

generations and that is why Labour spent most of 2010 having a leadership

election that foolishly enabled that mythology to become part of the public

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