Some characteristically cautious words by Mervyn King, the Bank of England governor, about fiscal stimuli have been hysterically seized upon by the nation’s Conservative press. The central bank chief said that the automatic stabilisers that “kick in” during recessions (such as increased benefit spending and lower tax revenues) “are bound to lead to higher fiscal deficits for the next two or three years ... and it doesn’t make sense to try and offset that”. He added, however, that, given the very large deficits expected, it would be sensible to be cautious about further discretionary fiscal stimuli. “That’s not to rule out targeted and selective measures that can do some good.”

But at the risk of lèse-majesté, I have to say that while there may be a good many reasons to think twice about a further stimulus in the forthcoming UK Budget, the size of budget deficit or the associated national debt is not one of them. Since my undergraduate days, I have been pointing out that a government budget is not the same as that of an individual or company. Indeed, the more reluctant people and corporations are to spend, the greater the case for the state to spend to fill the gap. The message is still too counterintuitive to get across.