Cut or spend? A political football

As the unofficial election campaign continues the race is on to name the date that fiscal cuts begin and Shadow Chancellor George Osbourne was off the mark yesterday at the LSE.

Announcing that spending on tax credits and child trust funds for better-off families would be cut immediately if the Tories won the general election,he told the audience

“The message could not be clearer – if you find yourself on the wrong road, you take the first available exit instead of carrying on.

This is going to be one of the elections issues,the Tories trying to demonstrate immediate fiscal prudence with Labour arguing for small steps in line with economic recovery.

The dangers of the Tory line are clear in plunging a fragile economy back into recession,whilst Labour's plans to raise spending by £31bn in the 2010-11 financial year, also seem unduly risky.

But the issue has to be faced.As the Economist says today,whilst everyone says the deficit is the big issue of the campaign,no one wants to talk about it much.

Nick Clegg attempts to in the FT

It is very clear that, as in the US, current levels of borrowing cannot continue without putting Britain’s credit standing at risk. We should not forget that at present, government borrowing is being artificially sustained through quantitative easing whereby, in effect, it buys its own debt. That is why I regard bringing stability back to public finances as the first big building block of our plan to re balance the economy and build it up again on firmer foundations than before.