Knifonomics (part 16): Things really would have been worse

Given numerous claims about how Alistair Darling was The One,  the chancellor who,  if only he’d been given the chance would have got the borrow/spend blend right, here, courtesy of the FT,  is the Institute for Fiscal Studies  analysis of Darling’s plans:

It seems likely that in the absence of the additional fiscal tightening announced since the general election, borrowing would have been on course to be closer to £76bn in 2016–17 than to the £26bn that was forecast in the March 2010 Budget.

and filling in the years between now and then, according to the FT:

This would add up to a total of £201bn extra borrowing by the end of 2016-17, the IFS forecasts.

Labour would respond that their plans would mean more growth, which has not been factored in to these forecasts. Perhaps – but as the IFS says:

The error in estimating the size of the policy impact would have to be implausibly large to lead one to conclude that borrowing would actually have been lower in the absence of the additional tax rises and spending cuts that have been announced since May 2010.

It might be that borrowing more to have a slower rate of deficit reduction would make more sense: it might benefit the economy in the longer term and help protect the most vulnerable in society. But it is not plausible, at least in the IFS’s view, to say that Labour would have borrowed less than the government.

What’s more, under the think tank’s forecast, Labour would also have failed to meet its fiscal mandate (as the government has missed its mandate). Instead of halving the deficit over four years, they would have reduced it from 11.2 per cent to 7.7 per cent of GDP, requiring an extra 2.1 percentage points of deficit reduction. That would equate, under the IFS forecasts for GDP for that year, to £35bn.

…all very dry and mathematical but look at the figures. We can’t afford that. We’re not even sure we can afford the current coalition plan.

So, although I entirely accept that Alistair Darling may, relatively speaking be a nice fellow, as well as a future source of amusing ” why Gordon Brown is a maniac” stories, he certainly is not the one that got away.

That's nice material, Alistair

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