New Star: Darling's budget will endanger the economy's health

Rather than shortening the recession, Alistair Darling's emergency budget will actually endanger the ...

Rather than shortening the recession, Alistair Darling's emergency budget will actually endanger the long-term health of the economy and impose major costs on future taxpayers, according to New Star's Simon Ward. According to the Treasury, cyclically-adjusted net borrowing will rise by 1.9 percentage points of GDP, the largest increase since 1992-93. This will contribute to record headline borrowing of £118bn in 2009-10 or 8% of GDP. Ward believes that the temporary nature of this package implies a much smaller positive impact on demand. He says: "Most consumers base their spending on the...