̽��ֱ�� of Cambridge - tax

It’s high time for alliances to ensure supply chain security, researchers urge

sc604 — Thu, 19 Oct 2023 18:00:00 +0000

An international team of researchers, including from the ̽��ֱ�� of Cambridge, are calling on government agencies and national banks to support an effort to map the billions of connections in the global supply network which, among other impacts, could reduce tax evasion by as much as €130 billion (about £113 billion) annually in the European Union.

̽��ֱ��researchers say that understanding supply networks could also improve supply security, promote objective monitoring of the green transition, and strengthen human rights compliance. Writing in the journal Science, they emphasise that international alliances, backed by government organisations and the research community, are needed for such an understanding.

Even though most companies know their immediate trading partners, they depend on countless other relationships up and down the supply chain. A shortage anywhere in the supply network may aﬀect suppliers, suppliers of suppliers, and so on, as well as customers and their customers’ customers.

“Supply disruptions caused an estimated loss of 2% of global GDP in 2021 – approximately $1.9 trillion (£1.6 trillion) – and signiﬁcantly contributed to the current high inﬂation,” said lead author Anton Pichler from the Complexity Science Hub (CSH) in Vienna. “For a long time, it was unthinkable to analyse the global economy at the company level, let alone its complex network of supply interconnections. That is changing now.”

“Understanding supply chain interdependencies between companies, sectors, and countries is vital for many challenges, from identifying how disruptions may emerge and cascade across economies, through to monitoring carbon emissions and ensuring ethical and sustainable practice,” said co-author Professor Alexandra Brintrup from Cambridge’s Institute for Manufacturing.

For almost a century, only aggregated data – such as the average values of entire sectors – could be analysed. Predicting how individual company failures would aﬀect the system was simply not possible. What happens to the economy when a speciﬁc company stops its production? What if an earthquake paralyses an entire region?

“Now, a combination of new micro-datasets, methods based in machine learning, and multiple government initiatives are creating the ability to map entire economies, which can give us the tools to answer some fundamental questions with real and timely impact,” said Brintrup.

Although the volume of data is vast – there are approximately 300 million companies worldwide, each with an average of 40 domestic suppliers, resulting in up to 13 billion supply connections – researchers can map the connections between individual companies.

Currently, value-added tax (VAT) data is the most promising option for reconstructing reliable large-scale supply networks. Countries including Spain, Hungary and Belgium use a standardised VAT collection that practically records all domestic business-to-business (b2b) transactions. With these, it’s possible to map the entire national trade of a country.

In most countries like Germany, Austria, or France, where VAT is not collected for individual b2b transactions but only accumulated over a speciﬁc period, such mapping is not possible.

“ ̽��ֱ��standardised b2b collection could reduce administrative overheads for companies and would contribute substantially to tax compliance,” said co-author Christian Diem, also from CSH. Estimates suggest that VAT-related fraudulent activities in the European Union (EU) amount to €130 billion annually.

Beyond tax evasion, other global challenges also depend on the detailed knowledge of supply networks. “For individual companies, it’s nearly impossible to ensure that all trading partners, their suppliers, and their suppliers’ suppliers operate in an environmentally friendly way and in compliance with human rights,” said Pichler. “If this were centrally documented in a gigantic network, it could be more easily ensured.”

̽��ֱ��next step is to link trade data from diﬀerent countries. Currently, the EU records trade in goods between its member states at the company level. If it also included services and linked them with VAT data, this could lead to a comprehensive cross-border company-level network. According to the authors, this would represent almost 20% of the global GDP.

̽��ֱ��European Commission laid the legal foundation by proposing ‘VAT in the Digital Age.’ “Unfortunately, this is far from being realised,” said co-author Stefan Thurner, of the Complexity Science Hub. “So far, we do not have a single situation where the supply chain networks of any two countries have been joined and merged. This would be an essential next step.”

To create a truly international picture of supply interconnections, hundreds of datasets must be joined, analytical tools developed, and an institutional framework must be created, together with secure infrastructure for storing and processing enormous amounts of sensitive data.

“To advance this endeavour, a strong international alliance of various interest groups is required, including national governments, statistical oﬃces, international organisations, central banks, the private sector, and academia,” said Thurner. ̽��ֱ��ﬁrst collaboration in science, involving authors in macroeconomics, supply chain research, and statistics, now aims to establish a foundation. ̽��ֱ��researchers hope to inspire others to join their eﬀorts.

̽��ֱ��researchers hosted representatives of European ministries, national banks, statistical oﬃces, and researchers at a workshop in Vienna on 5–6 June 2023.

Reference:
Anton Pichler et al. ‘Building an alliance to map global supply networks.’ Science (2023). DOI: 10.1126/science.adi7521

Adapted from a CSH press release.

̽��ֱ��COVID-19 pandemic highlighted the interconnected nature of global supply chains, and showed how a disruption in one part of the world can have global effects. In 2021, supply disruptions were cost the global economy an estimated $1.9 trillion.

Understanding supply chain interdependencies between companies, sectors, and countries is vital for many challenges

Alexandra Brintrup

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Aerial shot of parked trucks, Scunthorpe, United Kingdom

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Opinion: When it comes to sugary drinks, people prefer a nudge than a tax

Anonymous — Thu, 09 Jun 2016 14:26:09 +0000

If sugary drinks were sold in smaller bottles, stores stocked fewer of them, and positioned them less prominently, we would drink fewer of them. But would we find these changes acceptable? ̽��ֱ��results of our recent study show that most people find these “nudges” (altering cues in the environment to change people’s behaviour) to be acceptable ways to prevent obesity. Taxing sugary drinks, however, was only acceptable to a minority.

But for both nudging and taxing, the acceptability of the intervention increased the more effective participants judged them to be. This suggests that people are prepared to trade off their dislike of an intervention for achieving a goal they value, such as tackling obesity.

As a population, we consume too much energy. Most people in the UK are now obese or overweight. We spend an estimated 10% of the NHS budget on treating the consequences. Excess consumption of sugar, including from sugary drinks, contributes to this.

Sugary drinks are consumed more by the poorest in society explaining, in part, the higher rates of obesity in this group. Unfortunately, educating people about the health harms of consuming an excess of sugary drinks – an intervention that most people find acceptable – does not reduce their consumption.

But the evidence is now growing that “nudges” as well as taxes could reduce consumption of sugary drinks. ̽��ֱ��recent announcement of a tax on sugary drinks in England comes with much public support, and the case is made more compelling by recent evidence from Mexico that taxing drinks reduces consumption, particularly among the poor. But obesity won’t be cracked by tax alone. Adding nudges to taxes would likely help, but the acceptability of nudging has, until now, been largely unknown.

In New York, a recent attempt to cap the size of sugary drinks sold in restaurants and other food outlets elicited a strong reaction from locals. But these views may have been influenced by campaigns run by industry-funded consumer groups that placed adverts on billboards and in newspapers asserting that this measure undermined individual freedom. Given that introducing these sorts of interventions will probably require regulation, it is important to gauge public acceptability outside of the context of a media campaign in one city.

Change the environment, change the behaviour

For our study, we recruited 1,093 participants from the UK and 1,082 from the US.

We compared the acceptability of three nudge interventions (reducing the size of sugary drinks bottles, elongating the shape of cans of sugary drinks so they look larger than current cans, and altering where on the shelf drinks were placed) with two more traditional interventions: education and taxation.

Education was the most accepted intervention (more than 80% of participants considered it to be acceptable), taxation the least (fewer than 46% judged it acceptable), and the nudge interventions rated between these (range: 51% to 68%).

Highlighting the unconscious nature of nudges did not reduce their acceptability. Nudging is more acceptable than taxation, but the acceptability of both may be sensitive to evidence of their effectiveness.

Perceived effectiveness was the strongest predictor of acceptability for all interventions across both the US and UK groups. In other words, the more effective people perceived an intervention to be, the more acceptable they found it. This replicates findings from other studies.

Mexico provides an interesting case study. With funding from Bloomberg Philanthropies, non-governmental organisations bought prominent advertising space to counter industry opposition to sugary drinks taxes. This included presenting evidence of taxation’s effectiveness at preventing obesity and other consequences of high consumption. This supports the idea that clear communication to the public of an intervention’s effectiveness – in this case, taxing sugary drinks – can increase public acceptability of the intervention. This may then lead politicians to implement the intervention.

Attributing obesity to the environment, rather than willpower, also predicted acceptability. ̽��ֱ��more people attributed over-consumption to the environment, the greater their support for interventions, particularly the three nudge interventions. This suggests that the public’s judgements of nudging could become even more favourable if we can successfully convey scientific understandings of human behaviour. This would result in people understanding that much of our behaviour, that is shaped by the environment, takes place outside of conscious awareness. Changing the environment could therefore help tackle obesity.

Theresa Marteau, Professor of Behaviour and Health, ̽��ֱ�� of Cambridge

This article was originally published on ̽��ֱ��Conversation. Read the original article.

̽��ֱ��opinions expressed in this article are those of the individual author(s) and do not represent the views of the ̽��ֱ�� of Cambridge.

Theresa Marteau (Behaviour and Health Research Unit) discusses how to get people to consume less sugar.

Dan Hughes

mmmm coke

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̽��ֱ��real corporate tax scandal

sc604 — Mon, 23 Mar 2015 08:00:00 +0000

In the midst of last month’s investigation by the UK Commons’ Public Accounts Committee into PriceWaterhouseCoopers, the committee chair Margaret Hodge concluded there was “promotion of tax avoidance on an industrial scale”. While the company was not accused of breaking any laws, and while PwC maintain that they operated within the laws of individual jurisdictions, there was a general acceptance that the complexities of the tax system leave it open to confusion to say the least.

What is certain is that Western governments have come out fighting on the subject. In the recently declared war on corporate tax evasion in Europe and North America, US technology companies have taken a particular beating. First President Obama called them “deserters” for changing the country in which they are officially domiciled in order to cut their tax bill. Then the European Commission decided to investigate Apple for its tax arrangements in Ireland, suggesting that these may constitute “illegal state aid”.

In the UK, as in other rich countries, politicians have come to realise that being seen to be tough on corporate tax avoidance is a vote winner. At last year’s Conservative Party conference in Birmingham, Chancellor George Osborne sharply criticised multinational technology companies for going to “extraordinary lengths” to avoid paying tax. Adopting an almost Churchillian tone, he went as far as to say: “If you [corporations] abuse our tax system, you abuse the trust of the British people.”

New legislation – dubbed the “Google Tax” – was promised to ensure that revenue earned in Britain would be subject to UK corporation tax rather than transferred abroad to be taxed at lower rates.

Double standards?

These developments are not before time and surely to be welcomed. And yet there is another corporate tax scandal that is significantly more pernicious than tax evasion by US technology companies in Britain – tax evasion through the use of tax havens by multinational companies, including British ones, in the poorest countries in the world.

̽��ֱ��scale of the problem is massive. According to a report made available by the OECD, developing countries “are losing to tax havens almost three times what they get from developed countries in aid”. A recent study by ActionAid suggested that almost half of corporate investment by large companies is routed to or through a tax haven (disconcertingly, the UK was found to be “responsible for one in five tax havens” identified in the report). Moreover, 98 of the FTSE100 were shown to use tax havens, 78 of which operate in developing countries.

̽��ֱ��net result is that the places with the lowest per capita income in the world continue to be deprived of resources they so badly need – with tens of billions of dollars worth of tax revenue siphoned elsewhere every year.

And yet the voices of social movement activists and non-governmental organisations (NGOs) in poor countries do not appear to resonate with UK politicians, while the UK media appears less outraged by tax evasion in poor countries than in rich ones. A cynic might suggest that this is because the citizens of poor countries do not have a stake in British elections or influence the fate of media empires.

Addressing an injustice

It is important to acknowledge that tax evasion in poor countries is not straightforward to address, complicated in many instances by local corruption and poorly functioning institutions. But there is so much more that policy makers in the UK and other Western countries could and should be doing.

UK politicians are justifiably proud of becoming the first – and to date only – G8 country to meet the UN target of spending 0.7 per cent of Gross National Income on aid for international development. This was a decision that, interestingly, was not especially popular in political terms. These same politicians who had the courage to make this bold commitment on international aid now need to go further and bring UK multinationals to account by ensuring that they act as global citizens and pay their way in the world.

Such a move would set a powerful example for other governments to follow. It would also be an important first step towards rectifying one of the most outrageous injustices of global capitalism.

Originally published on the Cambridge Judge Business School website.

Western governments have finally begun to pay close attention to tax avoidance by multinational corporations in rich countries. But where, Cambridge Judge Business School’s Professor Paul Tracey asks, does that leave poor countries, where the effect is arguably much more devastating?

Places with the lowest per capita income in the world continue to be deprived of resources they so badly need

Paul Tracey

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Five paintings by Stanley Spencer accepted in lieu of tax and allocated to the Fitzwilliam Museum in Cambridge

sj387 — Fri, 22 Nov 2013 12:05:46 +0000

Stanley Spencer is recognised as one of the most important British painters of the 20^th century. Born in Cookham, Berkshire in 1891, at the age of 17 he went to study at the Slade School of Art in London. ̽��ֱ��group of five works allocated to the Fitzwilliam were formerly in the collection of wood engraver Gwen Raverat, grand-daughter of Charles Darwin, who first met Stanley Spencer when they both enrolled at the Slade School in 1908. They became life-long friends, Gwen dubbing Spencer ‘Cookham’ in recognition of the affection Spencer held for his home village.

John Donne arriving in Heaven was painted by Spencer when he was still at the Slade aged 20. It was one of the most important works of his early career and was shown at the second Post Impressionist Exhibition (1912) where it was hung in the same gallery as works by artists including Matisse and Picasso. Spencer shows the poet crossing Widbrook Common; he passes four figures, each praying in a different direction to express the all-encompassing nature of Heaven. Spencer regarded the picture highly saying it came ‘more directly from my imagination than any I have ever done.’ It is one of the first works where he sets a religious event in an English rural setting, a concept that would be a hallmark of many of his later great masterpieces.

Scrubbing Clothes and Making a Red Cross were painted in 1919 when Spencer had returned from the war. Originally he had been commissioned by the Ministry of Information to work up these war studies into paintings, but instead they inspired part of his decorations for the Sandham Memorial Chapel. Scrubbing Clothes depicts men of Spencer’s Field Ambulance Unit washing their clothes on boulders in the River Struma. Making a Red Cross shows the unit laying out a cross made of broken tiles and rocks as a recognition signal to aircraft. Both studies show his natural sense of design.

In 1932 Gwen Raverat proposed that Spencer paint decorative panels for two 10-foot semi-circular spaces over the doors of the Reading Room of the new ̽��ֱ�� Library, then under construction in Cambridge. Unfortunately Syndics of the Library could not afford the project; the sketch Builders of the Tower of Babel and the small oil painting Making Columns for the Tower of Babel were all that remain of this suggested commission.

̽��ֱ��five paintings join the Fitzwilliam’s fine collection of early 20th-century British paintings, which already includes eight paintings and four drawings by Spencer. ̽��ֱ��collection features some of Spencer’s most famous canvases; Love among the Nations (1935-36), Self-Portrait with Patricia Preece (1937), Self-Portrait (1939) and Love on the Moor (1949-1954). ̽��ֱ��institution is one of the most important places to study the artist outside London.

̽��ֱ��works have been acquired for the nation through the Acceptance in Lieu scheme, administered by Arts Council England from the estate of Gwen Raverat and allocated to the Fitzwilliam Museum. Tax of £167,883 was settled by their acceptance. As their total value exceeded the liability on the estate, the Fitzwilliam Museum made good the difference of £308,117 with the help of generous grants from the Art Fund, the V&A Purchase Grant Fund and the Friends of the Fitzwilliam Museum.

Tim Knox, Director of the Fitzwilliam Museum commented: “ ̽��ֱ��five works by Spencer that have been added to the Fitzwilliam Museum’s collection greatly enrich our holdings of this interesting and very English artist. Moreover, they also have a strong Cambridge connection. We are grateful to the AIL Scheme for allocating these works to the Museum, and to the generous donors who supplied the additional funds needed to secure them.”

̽��ֱ��new acquisitions are now on display with other 20^th-century British works in the recently refurbished Gallery 1 at the Fitzwilliam Museum.

Sir Peter Bazalgette, Chair of Arts Council England said: “That these five works have been offered in lieu of inheritance tax and can now be permanently accessed by members of the public, means that important parts of our own history, society and identity are not lost, hidden in houses, but are part of an institution’s collection, open to interpretation and educating and inspiring people.”

Stephen Deuchar, Director of the Art Fund, said: “Stanley Spencer is one of the greatest British artists of the 20^th century and it is with great pleasure that we support the Fitzwilliam Museum's acquisition of this group of exceptional works. It is another example of the benefits of the government's Acceptance-in-Lieu scheme to UK museums, galleries, and their visiting public.”

̽��ֱ��five paintings are - John Donne arriving in Heaven (1911), Scrubbing Clothes (1919), Making a Red Cross (1919), Builders of the Tower of Babel (1933), Making Columns for the Tower of Babel (1933)

Five works by Stanley Spencer (1891-1959) have been accepted in lieu of inheritance tax and allocated to the Fitzwilliam Museum, Cambridge. They include one of his most significant early paintings and two preliminary sketches documenting his experiences of World War I. ̽��ֱ��works were acquired through HM Government’s acceptance in lieu scheme with additional support from the Art Fund, ̽��ֱ��V&A Purchase Grant Fund and the Friends of the Fitzwilliam.

̽��ֱ��five works by Spencer that have been added to the Fitzwilliam Museum’s collection greatly enrich our holdings of this interesting and very English artist

Tim Knox

Stanley Spencer/Fitzwilliam Museum

Making Columns for the Tower of Babel (1933)

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Austerity Britain: it's déjà vu all over again

amb206 — Wed, 16 Jan 2013 09:46:22 +0000

In May 2010, Britain’s first coalition government since the Second World War announced that its primary objective was to reduce the deficit, then running at 11 per cent as the public sector spent £156 billion more than it raised in taxes. Six weeks later, the Chancellor, George Osborne, increased the spending cuts and tax hikes inherited from the Labour Government to £113 billion over five years, with the largest single adjustment to fall on welfare recipients. ̽��ֱ��Chancellor aimed to balance the budget by 2016, by which time public sector debt would be declining as a percentage of Gross Domestic Product (GDP). He also plans to reduce the public sector’s share of the economy from 48 per cent to 39.5 per cent.

While Osborne is keen to stress the unique nature of the current crisis, we have been here before – not once but several times. In 1922, a previous Conservative-Liberal coalition cut public spending by 9 per cent, with most of the reduction falling within the first year. In this post-war era, pressure came from the ‘squeezed middle’ as millions of households that had begun paying income tax during the First World War latched on to a Daily Mail campaign to root out ‘waste’ in the public sector. Before the war, the basic rate of income tax was 8 per cent. In 1922 it was still at its wartime high of 30 per cent as the Government built ‘homes for heroes’ and widened education provision. ̽��ֱ��Geddes Committee, appointed by the Prime Minister, Lloyd George, recommended that spending be cut by 10 per cent, a third to come from reduced naval expenditure, with education taking the second largest cut.

These cuts, although watered down by Cabinet, allowed the Chancellor, Sir Robert Horne, to achieve his primary aim of reducing income tax, from 30 per cent to 25 per cent. They also contributed to a miserable decade for the British economy. While America enjoyed the ‘Roaring Twenties’ and a long stock market boom that finally broke with the 1929 Wall Street Crash, Britain endured a General Strike as workers protested against wage cuts, and high unemployment, particularly in ‘Outer Britain’ as the old industries of the industrial revolution (cotton, coal and iron) suffered depressed demand.

With the global depression lowering tax revenue and increasing unemployment after the Wall Street crash, the government was in deficit by 1931. ̽��ֱ��economic orthodoxy of the day meant that the budget simply had to balance if the pound were to remain on the Gold Standard. ̽��ֱ��May Committee, appointed to identify savings, estimated that the shortfall for 1931 would be 5 per cent of public spending, rising to 9 per cent in 1932. ̽��ֱ��Committee decided that the burden of adjustment should fall on the unemployed. While unemployment benefit had not changed since 1928, the cost of living had fallen. ̽��ֱ��Chancellor was advised to cut benefits by 20 per cent, taking them just below 1928 levels in real terms. Once again, education was to be the second major source of savings.

̽��ֱ��minority Labour Government was unable to agree on the cuts and collapsed in August 1931. ̽��ֱ��successor National Government (another Conservative-dominated coalition) introduced an emergency Budget in September which eliminated the deficit, now estimated at 12 per cent of public spending, through a combination of tax increases, spending cuts, and debt rescheduling. ̽��ֱ��largest saving came from unemployment benefit, where a 10 per cent cut was combined with increased insurance contributions. ̽��ֱ��Government also announced public sector wage cuts. These fell particularly onerously on junior naval personnel, who were asked to take a 25 per cent wage cut. When they read about this in the newspapers, part of the British fleet mutinied. As news of the mutiny spread, the pound came under speculative attack, forcing Britain off the Gold Standard. So, while the 1931 cuts failed in their primary objective of keeping the pound on the Gold Standard, coming off gold allowed the authorities to direct their attention to the domestic economy, laying the foundations for the 1930s recovery with looser monetary policy.

̽��ֱ��defining image of the 1930s is the Jarrow March, as unemployed workers walked from the North East to London in protest at their plight. But for those who held on to their jobs, it was a relatively good decade as strong economic growth raised living standards.

̽��ֱ��1930s recovery was sustained by rearmament and spending on the Second World War. After adjusting to a peacetime footing in the late 1940s, Britain enjoyed a long post-war boom, which came to an abrupt end with the 1973 oil shock. While most industrial nations reduced spending to offset the increased cost of oil imports, the British decided to ‘tunnel through’ to North Sea oil production, due to come on stream within five years. This meant higher borrowing. In 1975, the government deficit was over 10 per cent. There was also a balance of payments deficit to finance. With a huge loan from the leading central banks falling due in December 1976, and no foreign currency reserves to repay it, the Government had little alternative but to ask the International Monetary Fund (IMF) for assistance. Having already granted two separate loans to Britain in late 1975, and concerned that public borrowing was ‘crowding out’ private enterprise, the Fund had left the Chancellor, Denis Healey, in no doubt that further assistance would be conditional on his lowering the deficit.

Despite a round of cuts in July 1976, confidence remained low and, with sterling in freefall, Britain announced its eleventh visit to the IMF. After several weeks of tense negotiations, Healey agreed to limit the deficit to £8.7 billion in 1977 and £8.6 billion in 1978 (still more than 10 per cent of public spending), contingent upon the economy growing by 3.5 per cent. This meant a further 3 per cent of cuts, spread over two years and across several departments, with defence and capital expenditure on roads, schools and housing bearing the brunt. In the event, the confidence effect of the IMF’s ‘good housekeeping seal of approval’, combined with the measures already taken, saw the British economy achieve robust growth in 1977 and 1978.

What do these episodes tell us about the situation today? ̽��ֱ��table shows that the current austerity outweighs all previous episodes as a percentage of GDP. Apart from 1922, when spending cuts were used to finance lower taxes, the burden of adjustment falls more heavily on spending than taxation.

	1922	1931	1976	2010
Fiscal consolidation/GDP	3%	4%	1%	6%
Budget deficit	3%	12%	7%	10%
Total public debt/GDP	171%	171%	45%	60%
Debt servicing cost/GDP	9%	9%	4%	2%
Spending cuts/tax rises	3:-1	7:6	2:1	3:1

̽��ֱ��size of the current task most closely resembles that of 1931, when the cuts fell principally on the unemployed. Today, Osborne deploys the same argument: that benefit claimants have done better out of cost-of-living adjustments than the working population. However, the differences are stark. With huge war loans to service in 1922 and 1931, interest payments took up a greater proportion of public spending. By contrast, servicing the debt presents few difficulties today. As the graph shows, the current level of public debt is modest by historical standards. Indeed, with ten-year Government bonds currently paying around 2 per cent, demand for UK debt appears to be outstripping supply. ̽��ֱ��government currently spends 3 per cent of GDP on servicing the debt, versus a historical average of nearly 5 per cent.

UK public debt/GDP since the Industrial Revolution

In 1931 the burden was split almost equally between spending cuts and higher taxes. By contrast, Osborne wants spending cuts to take 77 per cent of the adjustment, citing academic work suggesting that cuts are less damaging to growth than tax rises. This is critical because it is growth that will ultimately decide the outcome. As Samuel Brittan of the Financial Times recently pointed out “if we have a normal economic recovery the red ink will diminish remarkably quickly. It we don’t, it won’t”. Twenty-five years of strong growth after the Second World War reduced public debt from 238 per cent to 50 per cent of GDP. Growth, not cuts, reduced a similar deficit in 1977-78 when the second year of cuts was contingent upon robust economic expansion.

Currently, the auspices are not good. ̽��ֱ��Office for Budget Responsibility now believes that the economy shrank in 2012, after predicting 2.8 per cent growth in June 2010. It has also downgraded its growth estimates to 2015, forcing the Chancellor to postpone balancing the budget until after the next General Election, by which time, on current estimates, public sector debt will be 80 per cent, 20 points higher than when the Coalition Government took office.

Reflecting upon the failure of monetarism in the early 1980s, Nigel Lawson quotes Robert Burns, ‘ ̽��ֱ��best-laid schemes o' mice an' men/Gang aft agley’. By the time he comes to write his memoirs, George Osborne may well share these sentiments.

Duncan Needham worked as a bond trader at JP Morgan and a fund manager at Cairn Capital before coming to Cambridge to take a PhD. His research focuses on UK economic policy from the 1960s to the 1980s.

̽��ֱ��last 100 years have seen several governments introduce austerity measures to try to balance the books. Duncan Needham, a Phd candidate in the Centre for Financial History, compares past and present, concluding that current public spending cuts are inhibiting the growth we need.

̽��ֱ��size of the current task most closely resembles that of 1931, when the cuts fell principally on the unemployed.

Duncan Needham, Centre for Financial History

Timojazz, flickr Creative Commons

̽��ֱ��Jarrow March symbolises austerity in the 1930s

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