Fiscal Policy — Public Expenditure and Taxation

The days of the Keynesian ‘dash for growth’ (based on a sudden pre-Election spurt in consumption spending only to be followed by a post-Election balance of payments crisis) are over- at least for the Labour Party. We must all learn from the experience of the French Socialist Government, where an overambitious expansion had to be reversed. The next Labour Government is not going to begin with the bang of overambitious expansion and end with the whimper of deflation and contraction. We are inclined to say now, that ‘stop-go’ is better than continuous stop. But this ‘stop-go’ cycle played havoc with both industry and the local authorities. It made it difficult for them to set longer-term investment plans with any degree of certainty. The result was that the ‘stop-go’ cycle only served to disguise, yet reinforce industry’s long-term relative decline.