With the Autumn Statement on Wednesday December 3rd, it was a busy week at Prime Economics.
Ann Pettifor appeared on Adam Boulton’s two-hour weekday evening news show on Sky on Monday December 1st alongside Spectator Editor Fraser Nelson to discuss the Chancellor’s pre-Autumn Statement infrastructure announcements.
When asked by Adam Boulton: Are you saying that the deficit is not a problem? Pettifor replied ‘It’s not a problem at all’ - explaining that the government’s debt is not like an individual’s private debt, as, unlike private individuals, the government has a central bank that can purchase government bonds at ‘virtually negative’ or very low rates of interest, and thereby help finance the deficit. The UK government’s interest bill has scarcely risen over the past few years, argued Pettifor, because Bank of England rates are so low. And it is wrong to suggest, Pettifor said, that we’re going to pass on a huge burden of debt to future generations… ‘The income that (investment) generates will pay for itself’ – thanks to the multiplier.
Pettifor was also interviewed on Channel 4 News when she appeared with Allister Heath of the Daily Telegraph where, again, she stressed that the real threat to the economy is deflation and low wages, not the deficit.
And on Saturday, she and Liam Halligan of the Daily Telegraph were interviewed by John Humphrys for BBC Radio 4’s Today Programme (51 mins in).
When asked by John Humphrys: How much should the state spend? Pettifor suggested that there is no need to set arbitrary percentages. The economy can be compared to a cake, and when the cake expands, the government’s share of it shrinks. When “the cake” contracts, the government’s share naturally takes up a bigger share.
“The debate around the budget has become quite hysterical” said Pettifor. “The fact is, the budget is in deficit because the private sector is incredibly weak and at times like this - when the private sector has been weakened by very high levels of debt, by insecurity, by a global slump – at those times we want the government to help us to become more economically secure and we do this via deficit (spending)’
On Friday Pettifor was once again a discussant on the pre-record of Al Jazeera’s Head to Head programme when Professor Arthur Laffer was interrogated by Mehdi Hasan. The programme will be aired at 8 p.m on Boxing Day. Make sure you tune in!
NB Al Jazeera English broadcasts globally on 26th December at 20.00, Saturday December 27th at 12.00, Sunday December 28th at 01.00 and Monday December 29th at 06.00 (GMT).