Expert Government

It is easy to look successful when one is spending someone else’s money, especially when one can also spend what they have yet to earn. Regardless of the sanity of that government policy, it is misusing the revenue from current and future taxation. Government spending is poorly directed toward encouraging retail spending and funding a bloated, overpaid, and inefficient public sector.
As much of what we purchase comes from other countries, some of that money flows out of the country and so retail spending is not good value for money. The public sector is notoriously bad value for money and some of it is not involved in fulfilling needs and wants. The public sector is funded by the private sector and so it should reflect the ability of the private sector to pay for it. Savings from downscaling the public sector should be redirected to stimulate the private sector. The most direct way would be to reduce costs to operate businesses, especially in employing people. This could include suspending the minimum wage and many other employment rights that discourage companies from employing people. While infrastructure projects improve the short term prospects of some companies, their total value is spread over a long period, so they do not achieve the best immediate effects.
Encouraging already highly indebted people to spend more on products that worsen the balance of payments, and using their future earnings to do so is not a sane policy. It seems the obvious needs to be stated, debt is not good. In broad terms, the reason we have problems now is because of excessive debt being used to inflate asset bubbles and the lack of confidence in the ability to service those debts. We need to deflate those asset bubbles, reduce debt, and diminish the chances of both recurring in the future. Policy needs to recognise the basic human traits of greed and hubris to restrain those that succumb to them. Free markets will always allow some to take advantage of others. They enable high wealth disparity which leads to a range of problems.
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Update 2010-03-09
Confirmation from the Office for National Statistics via the BBC that encouraging spending is not the panacea.