You cannot spend your way out of debt.

If debt is the problem, to the extent that neither lenders nor borrowers are confident, then manipulating the economy to increase debt, hoping thereby to encourage spending and so stimulate economic growth is not going to help. What is needed is removal of barriers to increased production and employment.

So far Gordon Brown’s government seemed to be accepting this advice. Let’s hope they continue to do so in the face of mounting pressure from the US for a ‘global response’ to the recession.