Simple remarks on British fiscal policy

The required recapitalization of the NHS is a major pending expenditure, and it is not playing a sufficiently large role in budget discussions.  The system was never as cheap as it looked, and now the bill is coming due.

If you think austerity is required (NB: not my view), the Hunt plans seem to be doling this out in dribs and drabs.  Better to rip off the band-aid and get it all over with.  Conditional on the view that austerity is correct, the current plans would not be nearly enough.

Even the U.S. Treasuries market is not entirely liquid and stable at the moment, so any market reaction to any policy in Britain has to be given a very careful forensics.  Don’t assume that you know what the market is telling us.

Muddling through remains the most likely outcome.