The repeated question on former spending to Labour leadership and deputy leadership contenders has never been well answered. After some thought I will attempt my own.
The quick answer is “Yes”; the economic textbooks will tell you that we should have been in surplus at that stage of the cycle, just as the economic textbooks will tell you that the economic conditions required a fiscal stimulus in 2010. But I question the assumptions implicit in the question, it implies Labour is not to be trusted on the economy, but consider that George Osborne wanted to match Labour’s spending, and nobody at the time was suggesting it was out of control. Then consider how George Osborne has delivered one of the worst recoveries in history, far more in defiance of textbooks and damaging to the economy than anything Labour has done.
It’s also worth making another point about the deficit and spending. A deficit is the difference between revenue and expenditure, so it is just as valid to ask if we should have been taxing more to reduce the deficit, and of course the merits of taxes and spending depend on their effect on the economy as a whole and without a detailed examination of the GDP effect of each policy it’s a bit pointless to discuss if we spent too much.
