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Government abandons its own golden rules on borrowing and debt

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You might remember that about ten years ago, when the current government was elected, Gordon Brown made a big deal about his strict new rules for government borrowing which were all part of his ‘no more boom and bust’ promise. Anyway, now that we’ve come to the end of the biggest boom in British history and are teetering on the precipice of the biggest bust in British history, Alastair Darling (the guy who replaced Brown when he got bumped up to Prime Minister) has decided that those rules aren’t quite as cast iron as they used to be.

Neatly sidestepping the whole issue of the government’s abject failure to deliver on one of its key promises and abandoning the policy which fueled that failure, Darling said in a speech today  “to apply the fiscal rules in a rigid manner today would be perverse.” 

So what’s really going on here? Call us cynical, but given that the UK is on the verge of sliding into a bad recession which is likley to last a year or two, and that there’s a general election due before July 2010,  it seems just possible that the government has decided to abandon its own borrowing rules so that it can raise the money needed to pay for some vote winning policies.

That said, Darling has also been spouting off about how the government can’t spend its way out of a recession and that higher taxes are pretty much inevitable. So to summarise: Our policies have failed, so we’re going to have to borrow a truckload more money and taxes are going up too – but don’t expect anything to show for all of this increased debt and taxation because we’re not feeling spendy and all the money we raise might just about be enough to stop the country from collapsing into an all out depression.

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