As the coalition talks chunter on, we keep getting told that the markets demand strong government to hasten deficit reduction. Translate the markets into the money men who caused the problem in the first placed - and who will not be suffering as a result of any austerity programme. (Why did they get off so lightly in the election campaign anyway?) Still, it was refreshing to hear one of the money men break ranks this weekend and tell my colleague Gillian Bowditch that we are over-reacting to the financial crisis. Martin Gilbert of Aberdeen Asset Management - the biggest independent fund manager in Europe, said:
" As for the deficit, it suits them all to say how bad it is.” He believes that the situation is not as bad as has been painted. Suggestions that we may turn into another Greece if the new chancellor does not get to grips with the economy quickly are overblown, he says. In fact, compared with most businessmen, he is positively optimistic. “Our debt as a percentage of GDP is less than Germany’s,” he says. “The problem is the deficit, not the level of debt. As long as we cut the deficit, we’re okay. As for fears over the £6 billion that the Conservatives intend to cut from the budget this year, Gilbert is sanguine.“All three parties would have been constrained on public expenditure. They are all going to have to cut. The only difference between them is that the Conservatives want to cut £6 billion straight away. It’s such a small amount of money in terms of the deficit, in terms of where we are, it’s tiny — a rounding error — but everyone is making a meal of it.”
For the full article go to The Gillian Bowditch profile in Sunday Times Ecosse
As a post-script, I keep reading the Clegg and Cameron are making deficit reduction the priority in their talks. Wonder if that means Clegg is insisting that the Tories postpone the worst cuts till next year to let the economy recover? Both he and Vince Cable were adamant about this during the campaign. Then, again, there is talk of six cabinet seats...maybe that's the price of a double dip recession for the Lib Dems. As well as selling out on electoral reform of course.