Is it too soon to reduce the public-sector budget deficit?
One of the main arguments from the Labour Party ahead of the general election related to Conservative party plans to reduce the public-sector budget deficit immediately. Gordon Brown and Alastair Darling both believe passionately that a reduction in public-sector investment in the short-term will impact upon job prospects, general income and the UK economy as a whole. But is it really too soon to reduce the public-sector budget deficit?
The sad fact is that despite the potential to put more people on the unemployment list there is a need to reduce the public-sector budget deficit immediately. Allowing the UK budget deficit to continue as it is, increasing overall national debt, would be suicidal in the medium to long-term and put the UK's AAA credit rating at risk. However, trying to find a balance between reducing the budget deficit and retaining some momentum in the UK economy is difficult to say the least.
Whichever government had taken office at the election there were many hurdles to be overcome no matter which strategy was put in place. The Labour Party could potentially have risked an increase in inflation while the Conservative/Liberal Democrat coalition could be putting the short-term performance of the UK economy at risk. In many ways this is, and continues to be, a no-win situation.
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