alittleecon

Expect to hear this phrase a lot next week from the Labour Party – “fiscally responsible” or “fiscal responsibility”. The last time I heard it used was on Sunday when Chuka Umunna was being interviewed on The Sunday Politics by Andrew Neil. Umunna is the Shadow Business Secretary and he was squirming under questioning about why Labour wouldn’t pledge to renationalise Royal Mail. Umunna said he wouldn’t because he didn’t know how much it would cost to renationalise and he wasn’t willing to write a ‘blank cheque’. Labour, he said were determined to be a fiscally responsible government. But what does this mean?

The phrase has two meanings. One used by politicians and neo-liberal economists, and one, more relevant (to 99% of us) meaning.

The first meaning is all about numbers and rules i.e. the deficit shouldn’t be bigger than x, or the debt-GDP ratio shouldn’t exceed y. These numbers…

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