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Monday, 22 December 2008

Adam Smith "Which fiscal policy?" my comment today

As someone facing almost certain unemployment in 2009 (I work in automotive R&D) any income the govt lets me keep now will go into paying off debt and then into building up savings. I have already cut my consumption significantly and cash from a helicopter wouldn't persuade me to spend it. I'd save it for when I have to support 3 kids (2 sons at University and one at secondary school) on jobseekers' allowance. I have also seen my pension go from DB to DC and the value of the fund has been hammered, so that is another reason to shift from spending to saving. Bad for the economy, I know, but I have to do what is best for my family. Since almost everyone in the private sector is concerned for their job security I imagine my view is pretty typical. If you work in the public sector, everything looks great: prices are dropping in the shops, salary is index-linked, so are pensions, job security is high. The only black spot is that Tuscany will be more expensive this year. So this is what the govt should do: big pay rises for public sector employees - they will actually spend it. And they vote for El Gord, too.

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