Shrinkage And Gas Filled Balloons

The last quarter's figures have been adjusted and we are now told the economy contracted by 0.5% rather than by 0.7%. There are naturally all number of calls for further Government spending to kick start the economy and take us out of recession with the BBC saying the deep cuts haven't worked. As any fule no, despite Osborne's statement when he came into office that he would impose spending cuts, there have been none - indeed the reverse has been the case with borrowing increasing considerably. In its attempt to mend the economy left in extreme danger by those geniuses Messrs Blair and Brown the Coalition had hoped to increase revenue through tax increases and so reduce debt that way. No hoped for increase in revenues has arrived thus proving the point made by the Laffer Curve. All the Chancellor can do now is to do what he said he was going to do to begin with. He must now cut even harder into the boil which has festered and grown bigger since he first took over its care. He should radically reduce taxes with some of the savings he makes using the balance to reduce the deficit faster and then begin to tackle the debt. At the same time Osborne must do everything he can to speed up the extraction of gas from our shale gas fields. The US has made significant cuts in its overseas gas dependency by aggressively extracting its shale gas and we can do the same. A side effect of using shale gas in the US has been to reduce carbon emissions which for those who are climate warmists must be an unexpected and pleasing bonus (though I doubt many warmists will be satisfied until we go back to candle power). Another beneficial effect, particularly if European countries exploit their own shale gas deposits, will be to curtail Russia's power by reducing its ability to manipulate its neighbours by cutting off their gas supplies from Russian fields as they have done in the past. There is an interesting post in The Commentator blog today about the likely effect of the exploitation of oil and gas fields in Russia's neighbouring countries and also of the fields discovered in the eastern Mediterranean by Cyprus and Israel which you can read here.