Tuesday, July 21, 2009

Stuck Up Queer Street Without A Golden Goose

All that remains from the fat years

The latest public borrowing figures are worse even than Tyler expected.

Last month the government managed to borrow £13bn, taking the total for this financial year to £41.2bn - twice the comparable figure for last year. It tells us that borrowing for the year as a whole will almost certainly be over £200bn, rather than the £175bn forecast in the budget.

As for debt, we've already reached 57% of GDP, well on the way to that scary 100% level - and that's on the government's own massaged definition (the same measure was at 40.6% in 1997).

So how did we get here?

Well now, you'll have to pay close attention to this next bit because it is very technical and incredibly difficult for ordinary people and government ministers to follow. Most of the time, only Highly Trained Economists like Tyler can grasp it.

You see - now concentrate because I'll be asking questions later - the government has been spending more than its income.

Get that? Its spending exceeds its income.



OK, let's try to make it nice and simple with a picture. Here's a chart showing government expenditure relative to government income since 1997 (totals over previous 4 quarters):

Now, look at it carefully. Can you see how for a few years after this government came to power, they more or less kept income and expenditure in line?

And can you see how in 2001-02 they stopped doing that, and instead let their spending rip well ahead of their income?

Now, children, do you know what happens to ordinary people when they do that?

Yes, that's right - they end up in Queer Street. And they have to sell their own body parts for a few pence simply in order to eat!

But some people - notably the present government - used to think that couldn't happen to governments. They used to think the government could always get more money from a Golden Goose called The Taxpayer.

And for a few years, it seemed to work. Spending was running well ahead of income, but the Royal Goose Master stuffed the Golden Goose (aka the financial and property markets) so full of special high octane corn, that egg production kept growing.

Then one day, the Goose could take no more. By now monstrously fat, with a hugely engorged liver, the poor thing waddled out into the middle of Canary Wharf and exploded. Bang! Just like that.

Which is why the government's income is now plummeting (see pic).

So what is to become of us?

Nobody knows.

But what we do know is this clothead government has no serious ideas whatsoever. In fact they are hiding under the stairs in the Royal Goose Master's house trying to ignore the latest crop of disasters:

  • Collapsing tax revenues at HM Revenue and Customs - down £32bn last year
  • £140m error in MOD's accounts
  • Rising losses to tax credit fraud and errors - now up to 8.8% of claims
  • Unauthorised £24bn bank bailout by HM Treasury
  • £1.5bn on another useless training scheme (Train to Gain)
  • etc etc

All we know is that we have another nine ghastly months of this.

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