Saturday, January 20, 2007

Deeper In Debt

How debt affects the economy

Another day older and deeper in debt.

As Gordo's borrowing binge continues, the official National Debt now exceeds £500bn for the first time ever.

But as regular readers of BOM will know, the real total- including all those Enron off-balance sheet items- is getting on for £2 trillion (see here for latest summary and ITBA video). In fact, you can even argue it's as high as £9 trillion (including future state pension payments).

And even in terms of those fudgy Golden Rules, the wheels are coming off: the Times has a good quote from Gordo's 2001 Budget speech:

“From the unacceptable level of debt we inherited — debt at 44 per cent of national income — I forecast debt in the coming year will fall to 30.3 per cent and in the following years I project 29.6, 29.7, 29.9 and 30 per cent successively. . . putting Britain in a far stronger position to deal with the ups and downs of the economic cycle”

But his Enroned National Debt is now 38.1% of GDP, and heading North at a rate of knots (40% being his tediously repeated Golden Rule maximum).

PS A few days back we blogged the lies told by the Blessed leader about how our inflation problem simply reflects a global problem. Guido has now posted the splendid Daily Politics interview where Brillo- armed with some facts- smashes the self-satisfied Ed Balls to a pulp. Well, actually, sadly, after Balls has fallen to his knees and acknowledged Brillo's brilliance and all-round superiority, he's let off. Disappointing. What do we pay our telly tax for if not to see government ministers humiliated?

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