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Would, in your opinion, the Excessive Deficit Procedure have happened regardless of the worldwide economic crash?
miro_o-
I tend to believe that the economic cycle is exogenous in as far as a recession will happen every 10-15 years. The 2007-8 crash was only usual because of its magnitude (which was probably related to how much leverage and excess developed in the run-up to it).
There is a bit of a time inconsistency to be a Keynesian when it suits (ie anti austerity at the moment when growth is slow), but abandon the flip side, which is to run offsetting fiscal surpluses in periods of above-trend growth.
NickCJ
This is such a straw man argument - the point that Cameron et al were trying to make was that towards the end of Blair II and all the way through Blair III they really ramped up spending in a pro-cyclical, anti-Keynesian fashion. This meant that even at the end of one of the greatest periods of growth in the UK’s history, the fiscal balance going into the recession was already in deficit. Hence when automatic stabilisers kicked in in 2008-9 we were breaching all of the EU Stability and Growth Pact triggers and got placed in an Excessive Deficit Procedure. This would have been the case even without the nationalisation of RBS etc (which had a national debt impact but not a lasting deficit impact).