Thursday, March 19, 2009
Brown's Legacy - World's Biggest Deficit
The latest IMF forecasts are an alarming read. They predict the first global downturn since WW2, with all the risks stacked on the downside.
For us, there's even more need to worry. According to the IMF, we will soon have the biggest government deficit in the world (or at least among the G20 nations). By 2011 we will be borrowing a banana republic style 11% of GDP - miles higher than we have ever borrowed before in our entire peacetime history.
In contrast, Germany will be borrowing 5.2% of GDP, France 6.2%, and "high deficit" Japan 8.2%. Even the-source-of-all-our-problems US will only be borrowing 8.9%.
This month's public finance figures confirm how quickly our position is deteriorating. Borrowing in 2008-09 is running £52bn ahead of where it was this time last year, and tax receipts are down by £15bn.
When Dave and George take over, they will face a worse fiscal mess than any incoming government in Tyler's lifetime. They will need to be as hard as nails.