AltAusterity Digest #20 October 26-November 1, 2017

The Chancellor of the Exchequer, Phillip Hammond, is set to unveil the UK government’s first budget on November 22nd. He told the BBC last week that the target for balancing the budget has already moved from 2020 to 2025. However, due to sustained pressures for increased spending, uncertainty around Brexit, and sluggish economic growth even this revised timeline may be optimistic. Some Conservative MPs, including Sir Oliver Letwin, have suggested that increased spending be offset with a tax increase, rather than continued borrowing.

Hundreds of Serbian pensioners rallied in Belgrade last week to protest measures associated with a £1.2 billion ($1.41 billion) loan deal with the IMF. To secure the 2015 deal with the IMF, the government was required to cut public sector wages and pensions by between 5% and 25%. The protests were initiated after the government announced that pensioners would receive a one-off payment of up to 6,000 Serbian dinars ($59.38), an amount that was deemed less than sufficient.

The Republicans may be backing away from their proposed tax cuts for the wealthiest individuals. Despite these potential changes, the tax bill is still being criticized by Democrats for “squeezing revenues from middle-class voters.” The plans for lowering the corporate tax rate from 35% to 20% are still on the books. Trump has dismissed the idea that this cut could be phased in gradually, and instead wants it to be instantaneous.

The 2017 IMF mission statement for Finland follows now-similar policy patterns. Finland’s economy is still in recovery with a mixed-bag of predictors. The current accounts balance is in surplus, long-term unemployment is down and inflation is low. However, unemployment is still relatively high and wages were frozen in 2017. The IMF recommends that Finland increase the flexibility of its labour supply by decentralizing collective bargaining, improve workfare measures, and use increased revenues for deficit reduction.

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