This week has seen some rather bizarre coverage of the latest turns in the global financial crisis, but what do academics have to say about where we go next?
While those inside the Westminster Village got quite excited about Gordon brown using the C word – cuts – two new reports attempt to get to grips with what is happening in the real world and explore whether there needs to be cuts in spending, rising taxes or both.
Recession Britain by Romesh Vaitilingam is a summary of the key findings of academic economists in the UK with regard to the effect of the global financial crisis on Britain.
It explores what can be learned from evidence on previous recessions: the three that Britain has experienced most recently, in the mid-1970s, the early 1980s and the early 1990s as well as recessions elsewhere in the world, and the global recessionary period to which current times have often been compared, the 1930s.
The report draws on analysis of a broad range of data sources and the work of numerous researchers and research institutions, many of them centres, programmes and individual scholars funded by the Economic and Social Research Council (ESRC).
The Forty Key Findings look at Britain in recession, the impact on jobs, the impact on people’s lives, the impact on business and the world in recession. It forms part of the ESRC’s wider coverage of the global financial crisis, that includes details of researchers, programmes and centres working in this area.
Britain’s fiscal squeeze: the choices ahead is the latest briefing note from the Institute for Fiscal Studies (IFS) and analyses the financial situation the country is in and presents the key choices that politicians will have to face.
It concludes that the rise in spending on public services as a share of national income may need to be completely reversed to fill the hole in the public finances – unless there are further tax increases or cuts in welfare payments.
Speaking at the recent Developments in Economics Education conference, IFS Director Robert Chote claimed that the country is in for “two Parliaments of pain” and that even in this scenario, cuts in public spending will be akin to those in the 1970s, when Britain was reliant on loans from the IMF.
Chote suggested that 80% of the revenue needed to return the economy to balance will come from cuts in public spending and only 20% will come from increased taxes. Tough choice seem to lie ahead, regardless of who is controlling the purse strings of the nation.