Evidence from the Economist magazine this week that the UK’s infrastructure is getting worse. Spending is “projected to fall from 3.2% of GDP in 2010 to 1.4% in 2020”. The chancellor’s dogmatic failure to separate borrowing for productive investment (the capital budget) from borrowing for spending (the current budget) will only harm the economy in the longer term.
This is an area in which his radical opposition Labour Party’s plans make a great deal more sense, although the Economist does not mention this. Plans for a national investment bank seem like a step in the right direction, and a way of making necessary public borrowing seem far more rational than what is proving to be a plan for austerity at any cost.