19 Jan '12, 12pm
The economic case against spending cuts is simple - why isn't Labour making it? | James Meadway
The economic case against the government’s spending cuts is simple. If government cuts its spending, demand in the economy falls. If demand falls, firms sell less. Firms that sell less make redundancies and cut wages. Demand falls further. The entire economy becomes locked into a vicious downward spiral. Cutting in a recession makes the recession worse.