Nighttime Must-Read: Robert Skidelsky: Speech on the Autumn Statement, in the House of Lords, 4th December 2014

…by what happens to the economy, and what happens to the economy is not all within the Treasury’s control. But it’s equally important to remember, that what happens to the economy is largely determined by what happens to the budget. This could hardly not be so, as government spends about 40% of GDP. Ever since I started writing and speaking about these matters in 2010, I have been predicting that the Chancellor would not meet his budget targets. The reason I gave was that the pursuit of those targets in itself slows down the economic growth on which their achievement depends. Why? Because it slows down the rate of spending in the economy, and growth depends on spending. The cuts have hit the spending, and the spending has hit growth.

So it’s not surprising that the Chancellor finds himself with a projected deficit of £91.3bn this year, when in 2010 he promised to ‘balance the budget’ by the end of this parliament. According to the OBR, the discrepancy between the projection and outcome results from ‘unexpectedly weak performance of tax receipts’. Perhaps it was only unexpected to the experts at the Treasury. In fact, it was the logical consequence of growth being so much below what was expected between 2010 and 2013, and of what has been happening to the labour market since…