Compare the policy options and prescriptions summarised in this press release of 3 February for the: IFS Green Budget 2010:

“Whoever forms the Government after the forthcoming general election should put in place a fiscal tightening more ambitious over the next Parliament than that set out in the Pre-Budget Report (PBR), but without putting the recovery at undue risk with significant extra tax increases or public spending cuts in the coming year . . . ”
http://www.ifs.org.uk/pr/gb2010pr.pdf

The full IFS Green Budget for 2010 is here:
http://www.ifs.org.uk/budgets/gb2010/gb2010.pdf

Btw “Green” here indicates “consultative”, not “infused with environmental concerns”.

According to the NIESR reported in Wednesday’s news:

“The British economy is still growing despite a surge of disappointing economic data, a leading think-tank said today. The National Institute of Economic and Social Research (NIESR) said that GDP grew by 0.3 per cent between December and February, compared with the preceding three-month period. . . But NIESR said that although the recession was over, the country would not rebuild total economic output to the levels seen before the slowdown for another two years, leaving the country in ‘a period of depression’ until then.”
http://business.timesonline.co.uk/tol/business/economics/article7056761.ece

FWIW I take seriously anything produced by the IFS and the NIESR and suspect the letter in the Guardian is intended more for its impact on opinon in the gallery.

To this end, we encourage the chancellor to use the forthcoming budget to announce a second fiscal stimulus

Substantially to increase public spending? Funded by further borrowing of course (because if it’s funded by tax rises then it’s not a fiscal stimulus). Well, it’s a theory.

Only a theory in this country. Policy in many others. You know, all the ones recovering from recession faster than us.

The special reasons why we have particular need to worry about the current scale of the government’s fiscal deficit are discussed in these two recent articles in The Economist:
http://www.economist.com/business-finance/displaystory.cfm?story_id=15498265
http://www.economist.com/business-finance/displaystory.cfm?story_id=15545882

See from the data table in the first of the links that the UK’s *cyclically-adjusted* primary deficit is larger than that of almost all the other countries shown. In the second link, the article assesses financial market data to show that the yield on 10-year government bonds is higher for UK bonds than for German government bonds. This is a clear warning sign.

The IFS shows in its Green Budget the urgency of dealing with the fiscal deficit while recognising the importance of avoiding the risk of a double-dip recession.

You know, all the ones recovering from recession faster than us.

They must be the ones with a deficit smaller than 12.5%, maybe the ones that didn’t run counter-cyclical deficits for the duration of the boom. If you’re pro-Keynsian recession deficits, you have to be pro-Keynsian boom surpluses. You don’t get to run deficits forever.

On the case for more income redistribution in Britain, see this recent Guardian report on a new OECD publication: Going for Growth:

“The chances of a child from a poor family enjoying higher wages and better education than their parents is lower in Britain than in other western countries, the OECD says”
http://www.guardian.co.uk/business/2010/mar/10/oecd-uk-worst-social-mobility

A summary of the OECD’s recommended policy reforms for the UK is here:
http://www.oecd.org/dataoecd/19/36/44652687.pdf

Hot news update on Saturday night:

George Osborne agreed that I might sack him, says David Cameron
http://www.timesonline.co.uk/tol/news/politics/article7060479.ece