Thread on the Treasury austerity leak: 1/ The HMT base case is no longer a v-shaped recovery but a U, with longer recovery and permanent scarring, costing a £337bn deficit this year. Unless we abandon the orthodoxy, that will mandate severe austerity - and flatline growth...
2/ The worst-case scenario sees growth stagnant for half a decade and an added 1.1 trillion to a debt of 1.75 trillion. To avoid that you have to ditch not just austerity but the economic model and ideology that demands it...
3/ There is an alternative if all parties are prepared to think beyond the old economic model. I hope the starkness of the HMT warning creates space for a cross-party discussion about a new way forward, as follows...
4/ Borrow what it takes. Set a new notional debt/GDP target stabilised around 120%. That would not leave the UK an outlier compared to other G7 economies and provide plenty of ammo...
5/ Adopt an overt policy of monetisation: leaving the option open to monetise is clever-clever of the Bank, but if you want predictable debt servicing costs and real interest rates you have to build a consensus around monetisation - so admit it's happening, do it bravely...
6/ "Tax the rich" is not enough. Tax wealth, force all major corporations onshore and aggressively shut down the tax havens. Let's get some of that $32 trillion into HMT's books before we go raising corporation tax on hairdressing businesses...
7/ Offset the new liabilities of the Treasury with new equity stakes in IAG, Virgin, the big pub and hotel chains, even SMEs - create a new off the peg public/private business model that SMEs can adopt...
8/ State led investment in a Green New Deal to stimulate growth and soak up the workers laid off from permanently impaired sectors...
9/ If all this sparks a sovereign debt crisis for the UK, we will not be alone in the world: the model is the Fed now and Draghi in 2012 - we'll do whatever it takes to stave off a debt-deflation spiral. The most decisive country will win the battle against financial speculators
10/10 The takeaway for Labour - the most constructive opposition can be here is to construct an alternative.
