Debt, deficit, lending, borrowing - 'wot's it all abart, Alfie?'

For a clear idea of the current financial situation for this 'septic' Isle we must all be grateful to Jonathan Jones at The Coffee House.  He has written a small piece which sums the situation admirably.

In essence, we borrowed £126bn last financial year which has just ended.  That takes our 'credit card' total to just over the £1 trillion level!  Our deficit last financial year, that is, the difference between what we spent over what we earned fell by 10%, slightly above the most recent target:

So the fiscal consolidation is proceeding, albeit a bit slower than planned. So far, it’s mainly being achieved through raising revenues — particularly VAT receipts, which are up 10 per cent on last year. Central government current spending, meanwhile, has fallen by just 0.2 per cent.

Jones doesn't say this but I will: it is obvious that the government has failed miserably to cut its own spending and has simply taxed us to buggery and back to raise the extra dosh!  To be fair, which I am not very inclined to be, part of the government's spending was in the form of £129 million a day in interest on our national debt!  If you strip that out, then core government spending dropped by 2.3%, but, net social benefits went up by 2.6%.

The plain, simple and obvious fact is that the government has shirked from really taking the axe to its spending because we are still spending more than we earn and the only difference is that the increase in this annual 'overdraft' is slightly slower than hitherto.  Thus, our national debt continues to increase year on year.  Cameron and Osborne had the chance to plead mercy from the electorate when they first came into power on the grounds that, as that outgoing ministerial idiot actually said in a note left at the Treasury, "Sorry, there's no money!"  That was their chance to 'do a Maggie' but none of them understand economics and none of them has even a whiff of a political philosophy, and Cameron has absolutely nil leadership qualities.  Now, as those somewhat frantic instructions for all government departments to set aside emergency funds indicates, they are beginning to realise that the ship of state is nowhere near being seaworthy.  Tossers, the lot of them!

 

Comments

[dearieme]

"we borrowed": who's this 'we', Bub? Do you mean we the citizens borrowed it as individuals and that's the total, or do you mean Our Bloody Government borrowed it?

[A K Haart]

We need to strip out some of the colossal amount of waste in the public sector, but there is no desire to do it and as far as anyone can tell it isn’t going to happen. Absolutely everything would be blamed on “the cuts” and ministers know it. They lack backbone and principle.

Tossers indeed.

[David Duff]

To be absolutely precise, DM, 'they' borrowed it but 'we' owe it! The mafia couldn't do it better!

I can hear your teeth gnashing from here, AK!

[rogerh]

I reckon Osbo's problem is much more difficult. The economic blogs touch on a dearth of investment opportunities in the West and an apparent lack of creativity and 'bezazz'. Some say this has been developing over the past 30 odd years.

Imagine if you will that I invented a 'large hadron transistor' (or whatever) that worked a million times faster than ordinary ones. Where would I set up a factory to make it? You got it, and not just the planning laws but labour costs too. OK, so I make money out of design - I sit 20 designers in front of screens then email design files to Taiwan and my accountant offshores the profits. I could go on.

Alternatively I could undertake a breeding programme to produce only super-clever people with super-clever skills others will buy. That is not going to work on so many levels. So Osbo is a bit stuck and can only hope the Europeans can recover enough to buy a few jubilee teacups (designed in Basingstoke, made in China). The world has become a flat market for labour - the implications are not pretty.

[David Duff]

That's a very interesting point, Roger. I remember a quote from Steve Jobs who said that what he and others did could only have occurred in the free-wheeling California of the '70s/'80s. I read a quote yesterday which said that California is now a State fit only for the very rich and the very poor and the mass of the middle-classes are leaving en masse.

[Andrew Duffin]

Uh-huh.

Well I suppose if a reduction in the planned rate of increase constitutes a cut (or even, as the Failygraph had it the other day, an "unprecedented cut"), then a reduction in the rate of growth of your overdraft does indeed count as some sort of progress.

Somehow I doubt my bank manager would see it that way.

They're out of control, aren't they?

[David Duff]

I think, Andrew, they simply lack "the vision thang", as dear old 'Dubya' put it. For that, of course, you need to have a rudimentary grasp of economics which both Cameron and Osborne lack, which is silly, really, because it ain't difficult - as Cafe Hayek reminds us today in the words of Milton Friedman:

"[M]y life as an economist has been the source of much pleasure and satisfaction. It’s a fascinating discipline. What makes it most fascinating is that its fundamental principles are so simple that they can be written on one page, that anybody can understand them, and yet that very few do."
http://cafehayek.com/2012/04/quotation-of-the-day-272.html

The final ingredient, of course, is will power - need I say more?