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Projected cuts of 10% next year on top of the already in the pipeline cuts of 25% would be difficult to sell as "a tiny cut in the _rate of growth_ of the budge

Projected cuts of 10% next year on top of the already in the pipeline cuts of 25% would be difficult to sell as "a tiny cut in the _rate of growth_ of the budget". The cuts to government capital expenditure has been largely the cause for the contraction in the construction [1], which has in turn contributed to the UK going back into recession. Borrowing in order to increase sales (taxes in the case of governments) or to decrease costs (increase economic efficiency, spending on infrastructure and the like) is a good idea; both companies and governments do this all the time. Borrowing to spend frivolously is a bad idea no matter who you are. [1] http://www.guardian.co.uk/business/2012/apr/25/eurozone-crisis-live-uk-double-dip-recession#block-22 http://www.guardian.co.uk/business/2012/apr/25/eurozone-cris...

tsotha 14y ago
>Borrowing in order to increase sales (taxes in the case of governments) or to decrease costs (increase economic efficiency, spending on infrastructure and the like) is a good idea It can be a good idea if the economic activity that results covers the cost of borrowing. But that's not an easy thing to determine, and any rational start to the process tends to get warped by political reality. The fetish for infrastructure spending results in, for example, rail projects that lose ¥32 for every ¥1 they take in: http://spikejapan.wordpress.com/2012/05/20/minispike-the-end-of-the-line/ http://spikejapan.wordpress.com/2012/05/20/minispike-the-end...