Public finances policy is drifting into a storm
When it comes to budget plans, the government seems happy to simply stay afloat when it should be taking advantage of favourable winds ahead of turbulent times
Think of the government’s budget as a ship. In 2008, a huge tear appeared in the hull. Property bubble taxes flowed away. Urgent supports for unemployment began to stream out. And sporadic bank supports pierced the vessel further, leaving it in critical condition.
From 2008 to 2015, governments tried to repair the damage at great cost. Emergency lenders kept things afloat, and this bought time for governments to make repairs gradually rather than ...
