From the TUC

Nick Clegg’s odd claim on fiscal policy

26 Sep 2012, by Guest in Economics

Nick Clegg today:

People keep telling me we should be doing what Barack Obama did with his fiscal stimulus. What they don’t tell you is that much of what the President had to legislate for, we are already doing automatically. So let’s not allow the caricature of what we are doing go unchallenged.

Bank of England Monetary Policy Committee Adam Posen this summer:

For almost the entire period since March 2007, and particularly since March 2010, the US has run a looser overall fiscal stance – a more stimulative fiscal policy – than the UK, even taking the full operation of the larger automatic stabilizers in the UK into account. Cumulatively, since 2007Q1, the difference has amounted to 3% of GDP

Clegg appears to claim that UK and US fiscal policy have actually been very similar, and whilst it’s certainly true that the automatic stabilisers in the UK are larger (due to a bigger welfare state), I’m afraid this claim doesn’t stack up at all.

As I’ve argued before:

…next year US fiscal policy is due to tighten sharply (although obviously this might be changed).  But in 2010 and 2011 there is no doubt that the UK and US were pursuing very different policies – one tightening fiscal policy and one stimulating the economy. The results are pretty clear.

2 Responses to Nick Clegg’s odd claim on fiscal policy

  1. Are Deficits “Good” or “Bad”? « uneconomical
    Sep 27th 2012, 9:51 am

    […] Weldon is dubious about Nick Clegg’s claim that UK and US fiscal policy have been similar.  He quotes Adam Posen’s paper comparing the […]

  2. Daphne
    Sep 27th 2012, 5:51 pm

    I will nether understand the Nick Cieggs like myself so many people lost their job and their home because people like nick and con-den put us out of work now they staying that the rich sould paid more why it take them so long for them to see that the only people they put out of work is the people that work 7day aweek 12hrs a day just to make rnd meet while the endjoy thenself with tax payer money look at what they are doing to the old people and the kind of care getting i last my job but was very luckly to find one but it only paid me what i was getting my son also last his job and so we have to live and just my wages that just does not go far keeping up with the winter bill this winter and the my home is tressing out as i know it will be hard to do both and i have dont think of food as yet but can i do this is not my doing but i am the one who is suffering Daphne