Why are we so susceptible to the effects of a ‘credit crunch’? Why should a loss of access to borrowing have such a devastating effect? It seems the modern economy is fueled not by wealth earned but by cash borrowed.
There seems to me to be a parallel with our reliance on fossil fuels. Both approaches leave us borrowing from the future and both have a finite limit. Having seen what happens when we reach a form of finite borrowing limit — a limit defined more by confidence than cash — should we not be looking at what will happen when we run out of oil?
The Liberal Democrats propose to tackle both problems at the same time. Rather than spend £12.5bn on cutting VAT, they would spend that money on insulating schools, homes and hospitals, building new zero-carbon homes, and expanding and improving the rail network. This would create jobs in the short term, and reduce people’s (and the government’s) energy and travel costs in the long term, making us more immune to future financial challenges. It would also leave us with a long-term green legacy that would benefit the country for years to come.
This is not a political blog and I don’t intend it to become one, but I find it hard to argue with the merits of this suggestion.