Where has the conference silly season left the debate on economic policy? George Osborne claims to have routed his critics: fiscal austerity has produced recovery. Labour, seemingly amazed that recovery has happened, has promised that a Labour government will continue to cut the deficit, albeit a little more slowly. The Liberal Democrats would join them in the slower lane. The main point of difference seems to be that Labour cuts will be fairer than Tory cuts.
The budget outcomes tell a different story. Osborne will have failed by a wide margin to meet his deficit-reduction targets in this parliament. The deficit is now likely to be more than £70bn in March 2015, when it should have been zero. This is a prima facie indication that the theory linking fiscal tightening with recovery was wrong.
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