Lessons from Japan

Japan's sad plight over the last two decades have taught us some very pertinent lessons. Britain is the most indebted country in the Western world and it is important that this is fixed in order not to undermine confidence in the markets.

The Conservatives speak of tax increases in the near future. However, we must not be too hasty to tighten our belts. Like Japan found out, it is unwise to tighten fiscal policy before we are completely certain that consumer demand is strong enough to carry itself. Otherwise, we risk a double-dip recession.

The dearth of credit means it is important that we keep public spending up. If the government can stimulate demand in the private sector, then we will see industry grow again and unemployment will fall. It is only then, that we must start looking for 'savings'.