CPS Director and author of How to cut government spending: lessons from Canada Tim Knox writes for the Wall Street Journal on the lessons London could learn from effective Ottawa's actions.
"At the end of this month, U.K. Treasury ministers go into purdah as they prepare for the 2012 Budget, to be delivered on March 21. They will likely have a strange mix of sentiments: anger at the horrific economic legacy they inherited from New Labour, leavened with anxiety over the intractable problems of the euro zone.
They are also likely to feel some relief at the confidence that bond markets have shown so far in the U.K. economy. In the next 12 months, the U.K. must raise £188 billion (or 12% of GDP) in new funds. And that assumes that there are no significant further economic shocks along the way.
If they wanted to find an excellent example of how to escape from their predicament, they could study Canada's reform program in the mid-1990s. In 1994, a new center-left government in Canada recognized that public finances were in a mess and getting worse. Rating agencies were downgrading Canadian debt. The Wall Street Journal went so far as to call Canada an "economic basket case" and "an honorary member of the Third World.""
To read the full article at the Wall Street Journal, click here.
Remember to read the report, How to cut government spending: lessons from Canada