March 4, 2013 10:51 pm
Spending and enhancing
growth
From Prof Dennis Leech.
Sir, Ryan Bourne and Tim Knox (Letters, February 22) claim: “Most government spending goes
to consumption spending and transfers. These are not growth-enhancing – and ... empirical
evidence suggest[s] strongly that, for a developed economy like the UK, it is cutting these that
will boost medium-term growth rates.” This cannot be allowed to go without a rebuttal.
The firm evidence is that there is no relation between the ratio of government spending to gross
domestic product in developed countries and the rate of economic growth. For example, the
latest (2011) OECD figures show that the Netherlands, Denmark, Hungary, France, Belgium,
Austria, Finland and Sweden all had a higher ratio of general government spending to GDP and
grew faster than the UK.
Dennis Leech, Professor of Economics, University of Warwick, UK
You may be interested in
Revenue sets sights on UK property owners
A statesmanlike separation is now the issue for UK
You're all working for the same end
Bankers will find a way round any cap
BoE persistent in making us poorer
Ordinary folk aren't able to stay ahead of the inflation
curve
London banks turn to law on bonus caps
Britain must fight off the bonus cap
Hungary revisits controversial constitution plan
Printed from: http://www.ft.com/cms/s/0/b613917c-8023-11e2-96ba-00144feabdc0.html
Print a single copy of this article for personal use. Contact us if you wish to print more to distribute to others.
© THE FINANCIAL TIMES LTD 2013 FT and ‘Financial Times’ are trademarks of The Financial Times Ltd.