debt

uk-national-debt

What has borrowing ever done for me?

A reader on twitter asked – How has government borrowing helped me recently? I’m tempted to paraphrase as – What has borrowing ever done for me? – just so that I can make a reference to Monty Python and the Life of Brian? – And what have the Romans ever done for us? – apart from education, sewers, wine, roads, peace, law and order  … (youtube) I’ve answered this question several times before: Why does the government borrow? Should government’s borrow But, I frequently get asked…

Can Labour be blamed for the economic crisis?

Can Labour be blamed for the economic crisis?

Readers Question 1. Can Labour be blamed for the economic crisis (i.e. did they really ‘overspend’)?  My view is that the global economic crisis is to blame, and that Labour could have spent less but that this is easy to say with the benefit of hindsight. I don’t think there is any economist who would try to blame the global financial crisis and global recession on the fact the Labour government increased spending on the NHS / education by a relatively moderate amount. The global recession of 2008-13 was caused by…

UK Debt Burden

UK Debt Burden

What is the UK’s debt burden? Firstly, there are different types of debt to consider Government debt – See: public sector debt (often referred to as National debt) Private sector debt – indebtedness of householders, finance sector and non-financial companies. External debt – the amount we ‘owe’ to other countries In addition, you might take into account – future liabilities, e.g. pension fund commitments. Also, equally important, is future economic growth, tax revenue and the ability to meet the current debt burden. Debt  burden as % of income The most useful way to consider the…

UK Government spending – real and as % of GDP

UK Government spending – real and as % of GDP

In 2013/14 the UK government is forecast to spend a total of £ 722.9 billion – nearly double 2000/01 spending of £359.6 billion Source: ONS Public Sector Finances MF6U – October 2014 Government spending as % of GDP Updated Forecasts of Government spending from Autumn Statement of Dec. 2014 Source: OBR, Dec 2014 Note 2013/14, government spending as…

The failure of quantitative easing?

The failure of quantitative easing?

Readers Question. Just saw a video called ‘How to waste £375 billion? (The Failure of Quantitative Easing)’ by Positive Money. I’ve recently started reading your blog and find your posts very informative. I wonder what you make of the ideas in this video and of this group in particular? (I haven’t seen the video. For some reason I never like watching videos only reading articles.) I would say Quantitative easing has been a quantified success. Or perhaps a better way of evaluating quantitative easing is that -…

The truth about debt

The truth about debt

Readers Question: You have partially explained the answer to my question in your reply to my other question, “What will we do when we can’t pay back the money owing to the government bond holders when they reach the end if their term”. While I appreciate the convenient use of the debt to GDP ratio I feel that it tends to sidestep the truth about the remaining debt. This is…

The false goal of a balanced budget

The false goal of a balanced budget

The German economy has been one of the world’s strongest economies in the post-war period. There are many aspects of the German economy which deserve praise and emulation – not least strong productivity growth, a booming export sector and prolonged low inflationary growth. In the post-war period Germany has played an important role in promoting economic stability and prosperity within Europe. But, in recent years, the German economy has seen several cracks appear and German economic thinking is now causing a major drag on Eurozone economic growth and prosperity. The false…

deficit targets

Budget deficit targets

Politicians are often keen on making targets to eliminate budget deficits by a certain year. There is a strong political motivation to be seen as strong and committed to reducing government debt. Politicians who are vague about the debt are often heavily criticised and it is seen as poor politics. An advantage of budget deficit targets is that it ensure politicians have a stronger commitment to make politically difficult choices – raising taxes or cutting spending. However, from an economic perspective targets for reducing budget deficits are not always as…