The case for a new Keynesianism when Labour returns to power | Letters

Carol Wilcox and Tony Brauer respond to an article by James Meadway of the Progressive Economy Forum

There is little point in James Meadway regretting Keir Starmer's lack of spending commitments while maintaining the fiction that spending increases will have to be met by at least some tax rises" (Keir Starmer may win power, but he won't be able to turn the UK around on the cheap, 9 January).

The government creates new money by instructing the Bank of England to credit private bank accounts to pay salaries, benefits, grants, etc. It needs neither taxes nor borrowing (its own money) to do this. Taxes cancel some of that money, but they have other important purposes. Tax rises to accommodate a fiscal rule" serve no purpose.