not exactly - but you're right in thinking that spending our way to recovery is a bad idea

because individuals can't really afford to do that, because we're all in so much debt (generally speaking)

for the government to reduce its debts though they need as much coming in in taxes as is possible

so if we spend more they get more VAT

also businesses that we buy from will generate more profit and so pay more corporation tax

the businesses will also need additional staff to cope with increased demand so will have more employees paying taxes and NI (new employees will not claim as many benefits either)

those new employees will have more money to spend, giving more VAT to the government (and so on)

Posted By: Ralf Scrampton on April 14th 2010 at 14:40:31

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