Where did the UK stimulus money go?

John Redwood and his commenters have the answers, and it's not a pretty sight:

" Since 2005 the government has doubled central government borrowing (on its own understated figures ) from £469 billion to £922 billion – an injection of £452 billion.

Since 2004-5 money supply (M4) has surged from £1,212 billion (£1.2tn) to £2,100bn (£2.1 tn) – it has also almost doubled. Notes and coin have gone up from £42 billion to £55 billion.

And what has happened to real output? It is almost the same in Q4 2009 as it was in Q3 2005! No growth at all for 5 years.

So where did all the stimulus go? Much of the public borrowing went on inefficiencies and on imports. Some of the extra money went into price inflation, and some is just circulating less rapidly now, given the poor state of the banks and the new regulatory toughness. "


# Marcelluson 28 Jan 2010 at 4:30 pm

Everyone is warning that an immediate recovery is unlikely, possibly for years.

However, Labour and their BBC robots are currently saying that it is vital not to cut spending now as that would harm the recovery.

This is merely a typically deceitful Labour trap to catch the Tories. They are planning ahead. It is to give Labour a bullet proof attack narrative against an incoming Tory government

If the spending cuts that everyone says are essential are indeed made by the Tories and the economy does not surge ahead immediately – the Labour-BBC machine will say that the economy is not growing BECAUSE of “Tory cuts”.

Their attack along these lines will go on for years and years.

I hope the Tories are aware of what Labour are doing, and prepare NOW to counter it.

John Redwood’s argument in this excellent post is the basis of the defence against that deceitful argument."