BW Jervis’ letter on the economy is a tempting analysis of the economy, but like all simple comparisons between household budgets and national economies, it does not work.
It makes sense for a household to cut spending in order to get out of debt, because it assumes that the household income remains the same. If a government cuts spending, there is an immediate reduction in income, as its tax revenues decrease. Debt thus increases.
This is exactly what happened in 2010, when the economy was growing again after the banking crisis, but as soon as the coalition imposed spending cuts, the economy shrank again.
It took public spending such as the Olympics, and a housing boom, to restore growth.
The comparison with Greece does not work either.
As a member of the euro, Greece cannot devalue its currency. If we were in a similar position, the pound would be devalued, and recovery would begin.
The much-maligned Gordon Brown kept us out the euro. History is always written by the winners!
Knowle Lane, S11