Clegg Says U.K. Deficit Cuts Intended to Avert ‘Market Panic’

Just in case you thought the new Deputy Prime Minister knows anything about monetary operations.

To avoid the non existent probability of becoming the next Greece they can take action to increase the real probability they become the next Japan:

Clegg Says U.K. Deficit Cuts Intended to Avert ‘Market Panic’

June 24 (Bloomberg) — Deputy Prime Minister Nick Clegg said the U.K. could have been the next victim of a “market panic” sweeping Europe if the government had not raised valued-added tax.

Defending Chancellor of the Exchequer George Osborne’s June 22 decision to raise the tax to 20 percent from 17.5 percent, which Clegg’s Liberal Democrats had campaigned against during for last month’s election, the deputy prime minister said the government faces a “black hole” in the public finances that is “even bigger than we thought.”

“The truth is that the world had changed very dramatically in recent weeks,” Clegg told BBC News today. “We’ve got this sort of economic firestorm on our doorstep in Europe, where the markets are putting huge pressure on one country after the next, knocking on the door in Greece, in Spain, in Portgual, and so on.”

“There’s a real worry that if we don’t take action now, that we will be the next victim, if you like, of that kind of market panic,” he said.

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8 Responses to Clegg Says U.K. Deficit Cuts Intended to Avert ‘Market Panic’

  1. anon says:

    Great smack-down of the (insufferable) El-Erian:

    http://krugman.blogs.nytimes.com/2010/06/25/in-the-long-run-we-are-still-all-dead/

    Reply

    Ramanan Reply:

    “In the long run we are always in the short run.”

    – Abba Lerner
    (Class notes, The John Hopkins University, 1957)

    Reply

    anon Reply:

    excellent

    Reply

  2. beowulf says:

    “We’ve got this sort of economic firestorm on our doorstep in Europe, where the markets are putting huge pressure on one country after the next, knocking on the door in Greece, in Spain, in Portgual, and so on.”

    If only the UK had opted out of the Euro! :o)

    Reply

    Barton Reply:

    The UK did not in fact enter the European Monetary Union, ie, the Euro. The UK government is still the sole, monopoly issuer of Pounds Sterling, and ii is a free floating, non convertible currency. Why no one in the UK seems to be aware of that or do not understand the options that affords, is a different story!

    Reply

    Tom Hickey Reply:

    Barton, Beowulf is being facetious. He is suggesting that the UK seem to think it joined the EMU and is acting as if it had.

    Reply

  3. Andy says:

    No-one has a clue about monetary operations here in the UK unfortunately!

    The outgoing Treasury Secretary left a note to his successor saying “there is no money left” – obviously he is unaware that the UK has a monopoly on its own currency! Before the recent emergency budget, the media and politicians were regularly asking whether the UK would be “the next Greece”.

    Even our central bank governor is openly a deficit hawk.

    Reply

    warren mosler Reply:

    and a student of Harcourt at that

    :(

    Reply

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