Yes, yes, government can just instruct the Bank of England to print more money. But even then there’s no money left.

Labour needs a “growth miracle” if it is to fund its aspirations for public services, economists have warned, ahead of the King’s Speech. Economists have raised doubts over the new Government’s ability to boost the economy and expect a repeat of the slow expansion in growth since the global financial crisis.

We can’t have government buying us lovely new things because all hte money’s already been spent. The promises that have been made to us about pensions, services, depend upon economic growth happening already. They can’t be afforded if there is no growth - if there is growth we can only have what we’ve already been promised.

But it gets worse:

The Resolution Foundation has estimated that Labour’s spending plans commit the party to around £18bn of annual budget cuts over the next parliament. As they stand, these would affect “unprotected” areas of government such as the Department for Work and Pensions, the Ministry of Justice, local councils and higher education – and a funding shortfall for a depleted NHS. Ahead of this week’s king’s speech, when the new government will lay out its legislative agenda, five public sector workers give their verdict on Labour’s approach.

Every single one of them insists that the correct move is to send them lots more money. Hey, that could even be true. But it’s another reason why we can’t have nice new things from government. Any extra money around is simply going to pay those who do what we currently get more.

There’s no money for new things because we need growth to pay for the current promises. Even if we do have growth we’ll not gain new things because we’re going to end up paying the current suppliers more. There really is no money left for new things. To gain new things we’ll have to stop having some other things. We are back in that world where opportunity costs reign.

So, what does government currently do that we’d be happy to do without in order to gain some other new and lovely thing? That’s the world we’re in…..

Tim Worstall