Morning Line: spending cuts could be disastrous – but there is an antidote

Well, why not just destroy the currency completelly and all carry on the party until everyone refuses to lend us any more money. The chance for everyone to act sensibly is long past. No one can be trusted to do it, over the long term nor even the medium term. So the only option is force. And as for growth, you don't create growth by borrowing when you are bankrupt in the mere hope it might stimulate some growth. That is utter gambling. It has never worked in the past. It can only lead to financial ruin for all, the prudent as well as the greedy, who want relief from their debts at others expense.

What is being suggested is that a Business that stopped making things years ago is kept on it's feet by continuous injections of cash.

We already have one of the highest debt ratios in the Wold - adding to it will not solve anything.

The fact is - the Empire and the money is moving to the East and we are faced with accepting a lower standard of living.

Many business men,both high and mighty and minnows have been asking what is the strategy for growth.

As anyone who has ever been involved in running a business knows,it is one thing to increase profitability in the short term by cutting costs,but that is no answer to growing the topline.

Of course the Government is right to make cuts,but I would like to see and hear a rather more positive and helpful approach from our 'leaders' towards private enterprise in this country.They have to realise that without a thriving financial and business sector the lights will go out!

Wholeheartedly agree with the above!

Well you may call it an antidote (That which counteracts or anything that prevents) Quantitative Easing is and has always been a receipt for disaster. The mere fact someone would call it an antidote beggars belief as it is the total opposite.

I despair of any real economists ever returning, we are really living in a fantasyland where monopoly money rules.

“Nothing is set in stone here” You couldn’t be more right like ice it will disappear just like the funny money.

I also am a truth searcher and agree with the two antidotes that Chris has set out.

The article has clearly identified a frightening problem that could put the politicians off from modifying their approach even though it is absolutely necessary, for fear of being accused of doing a 'U' turn. That they must not.

The combination of easing money supply with fiscal measures if so required, is widely regaded as probably the safest tool available.

The outgoing chairman of British Chamber of Commerce stressed the need for one of the antidotes mentioned in this article:growth- ideally it should have been up and running before the introduction of austerity measures. If there was no time for it, perhaps now it can be done!

Those who know are saying that there are businesses that can expand in the current situation if they could imrpove their working capital. They should be backed up to start with!

Maybe the writer of the article doesn't think the cuts are the antidote to the binge of the last 15 years or more. So he is suggesting an antidote to the antidote. Ha ha. I guess as part of the financial world he is entitled to be as delusional as the rest of th eso called economists that didn't see it coming.

Reading today about Sir Philip Green's report on (Labour) government waste, action in their own back garden by the present government could substantial reduce the deficit without too much recourse elsewhere!!!

There is a simple solution, alongside making massive savings in the public sector (and I mean seriously massive!), and instead of QE (a dangerous road) why not provide similar quantities of cash to private enterprise in government backed loans and grants. There are huge potential new international markets in renewable energies. An investment in increasing our expertise in these fields would in turn release us from our dependencies on imported fossil fuels. Growth and employment would come from these new industries, along with increased exports and a reduction in imports a win win situation.

I would most like to see all public sector employees earning over £100K put out in the private sector and be encouraged to sink or swim with there obviously highly valuable skills! Of course loans would be available to get them on their feet.

David said "I also am a truth searcher and agree with the two antidotes that Chris has set out".

Well David if you truly believe that you will never find the truth, because you are going in the wrong direction.

Christopher Pissarides' comments were in fact quite cautious and reasonable, in contrast to the Ed Balls/Paul Krugman line that represents a state of denial that deficits matter, a continuation of the kind of Keynesian economics that ended up giving Keynes an unjustified bad name. There may well be a need for some wriggle room in the programme of spending cuts and tax increases in the light of economic developments, but this doesn't mean that there isn't a serious problem to be addressed.

Goverments do not create wealth, certainly without the average person working for himself/herself in the private sector or working for a business that is viable in the private sector we have no economy, as for printing more money..... what for, to pay more benefits to people who do not want to work, or to pay more single mothers to have more children.

So are you saying that Labour may have been right?

Where is the common sense gone politicians- stop giving £7 Billion OF OUR MONEY away to overseas aid, a lot of which ends up in the bank accounts of corrupt and dishonest leaders. Stop giving £6.5 Billion OF OUR MONEY to the EU until this whole mess is sorted out - what can they do about it after all and if they cared about the citizens they should accept it - not demand an extra 6.5% on top of what we are paying. Put the British people first for a change, before other nations and the EU budget. Get the welfare bill down and replace money with vouchers and get the lazy scroungers back to work including those able bodied who think they are disabled when they get stress or anxiety or depression. Finally control immigration as it is costing us billions every year - u cant get employment down if more and more are coming into the country taking what littrle jobs are left and increasing the welfare bill. Are there not any politicians with some backbone out there who can put our interests first.

I was linking this article with the one that Mr Marshall wrote a few days ago. It discussed where growth is going to come from. It was suggested that private sector is has a chance of creating revenue, and creating employment etc. but is cash starved. Media has been highlighting many new projects ideal for small bussiness and some even for medium sized businesses. Many would be new ventures and others existing business waiting to be expanded. ‘Growth’ was picked out from article. Perhaps this should make what I meant by ‘growth’ a bit more clear.

Truth Searcher

The article indeed does not seem to treat government austerity measures as antidotes. Indeed he seems to acknowledge their necessity. However, he seems to recognise that their implementation sound so scary, and explains among other things it is it is an unchartered territory. What if it does not work out? In these circumstances you think of escape route. He calls them ‘two antidotes’. They are monetary policy and flexibility over next year’s tax rise. Last but not the least, he stresses the need for the freedom to change an approach if does not produce the desired result “nothing is set in stone”. I truly believe that the last point is so important.

I have to say to Alan Tonks that I would like to find the right direction if you could show it to me.