All political parties must face up to the debt crisis' severity 

Jim

It's worse than you suggest, by 2012 we will be importing 60% of our oil, that is a new, huge structural deficit, to add to the other one.
Get ready for race riots and generally bad times.

Cuffleyburgers

And the best way to achieve growth is to cut taxes and deregulate.

The opposite of what Brown has been doing for 13 years.

No wonder we are in the doo doo.

Kick off the slippers, pour a scotch, or light a spliff, and watch the movie Event Horizon. If we don't tackle our balance sheet we shall career to Event Horizon.

The gravity of interest payments sucks you into a black hole.

How the elite allowed our balance sheet to get this way is the scandal of our times.

Dean

I agree with the headline and comments, but would like to know what percentage of the debt burden is accounted for by the cost of the bank bail-outs (since the Tories don't dispute that these were unavoidable). There is good reason to think that these costs will be recovered more quickly than many commentators were forecasting six months ago - provided of course that an economic recovery gets underway and is not stifled by premature fiscal tightening, as some Tories appear to favour. It is possible, therefore, to envisage a more benign scenario than the one you present here.

I'm also getting a bit tired of the way the Tories are constantly trying to claim the "debt issue" as all their own, as if they had predicted all along that the Brown-Blair economic boom would end in tears. This was emphatically not the Party's position back in 2005-2006 when Cameron launched his modernisation project. Back then all the smart talk was about how "sociocentric" concerns would dominate the next general election. Economics was definitely not high on the agenda. A little more humility from the Conservatives would not go amiss.

john miller

Crafty bugger!

I remember some Coffe Houser saying this a few days ago. Can't remember the bloke's name though...

G.J. Wyatt

Those expanding Natwest advertisements are a bloody nuisance on these web pages,

TrevorsDen

Cuffley has a point - we need to promote growth as well but real growth not Browns bogus growth. But successful growth if it goes to pay off the debt leaves nothing left for us, the tax burden even if does not go up will not go down.

Can I repeat again that even under the alleged good times under Brown the deficit ballooned. So simply returning to growth without some other corrective will not solve our problem. Cable is just grandstanding.

The paper I currently love to hate - The Telegraph points to the monumental cost of Browns failure, even by his own definition.
http://www.telegraph.co.uk/finance/financetopics/budget/6198910/Gordon-Browns-costs-of-failure-will-reach-256-billion.html
"£193.4 billion on social security benefits in 2013/14. Paying interest on the Government’s outstanding debts will cost £63.4 billion."

TrevorsDen

PS - I for one do not think we will recover the costs of the bank bale out quickly and last time I looked we were sitting on losses.

(I need a 'PS' because you cannot scroll back or otherwise from the comment screen to view the thread)

Moraymint

How come Will Hutton (he of Work Foundation fame) keeps telling us that there isn't a problem? Does he know something we don't?

Lawrence Greek

Givent hat the banks are back to their old tricks we could well see another wholesale collapse within the next decade. If we think we're screwed now, we will be ruined then.

Moraymint

Is it just me, or is the situation grave?

Why does there seem to be so many commentators who come across as sanguine about the prospects for the UK?
A lot of what I research and read appears to point to a situation where, within the next 5 years or so (especially if you chuck in Peak Oil), we're going to experience socio-economic chaos in the UK.

And yet, many of this country's so-called elite (like Will Hutton, who seems to live on another planet) appear to be saying that our problems are not terribly significant in the great scheme of things, and we should all just calm down and keep going.

What the hell is really going on? Can somebody (credible) please give me the low down?

Am I supposed to be ramping up my transition to the Good Life (Richard Briers and Felicity Kendall style), or stocking the champagne cellar?

This is serious.

Marcus Tankus

@Moraymint , It doesn't matter, as the political elite are financially protected , that's why they are so sanguine. !

Mark M

GO and search for some Dan Mitchell videos on YouTube. His most recent one shows how you get the most growth when government only spends ~20% of GDP. If we want to grow enough to be in a strong position by the time the next recession comes, we'd be best doing some serious pruning.

The economy grows more when government is spending less (to a point).

oldtimer

Apart from cuts in government spending, much will depend on tax reform. Tax needs first to be simplified and restructured to encourage savings and investment and second to eliminate all those stupid taxes that are driving businesses away from the UK.

Kristian Pedersen

This is an extraordinary mess. In Canada, when they faced a severe budgetary crisis, they made cuts throughout the public sector but had the good fortune to have embarked on this during the most benign economic climate since the 1950s. This luxury will not be available to Britain; the economic conditions will probably not be as favourable in the next decade as they have been in the preceding one, so the growth will be much slower and tax revenue will not increase as much as many in the political classes might hope.

I think that it is time in Britain that we consider a balanced budget law, with an upper-limit to taxation, forcing the government to live within its means and stop squandering our money so flippantly for political advantage. We have no reason to expect any government, but especially not Labour, to show the slightest competence in the management of financial matters. This government has regulated, spent and borrowed so much it has condemned the next generation to paying for a debt that really was accrued in bloating the civil service and passing laws to restrict our liberties.

Hysteria

in my view the answer at a macro level lies in massively reducing the size of the State, thus freeing up the intellect and capital of the country to generate real value.

Of course the devil is in the details - but like Moraymint I do think that simply bumbling along as we have is not answer.

Peak Oil really does change everything - it is our curse to live in a time when abundant cheap hydrocarbon energy is coming to an end.

Nick

I agree with GJ Wyatt's comments about the annoying expanding NatWest advert. Banks are unpopular enough as it is without NatWest going out of its way to interfere with ones readings from the Coffee House regulars.

Hysteria

O/T - is it just me but does anyone else think CH is losing its edge a little ? the number of quality comments seems less than 12 months ago.

I don't have the "metrics" to prove it - but I just don't see CH as quite the force for reasoned debate it once was.....

Procrustes

Dean -the only point I dispute is:

'There is good reason to think that these costs will be recovered more quickly than many commentators were forecasting six months ago'

Historically bank bail outs have repaid only 55% of the bail out figure. (source IMF)Reportedly the full exposure has not yet worked through the system,so it is possible the return could be less.

Politicians blessed with hindsight are not helpful -but those who possess the facts also need to face them -this issue transcends politics and Labour seem unable to understand this.

David

My understanding is that we are now at a profit on RBS but still showing a loss on Lloyds. This is totally misleading however. It does not include the financing costs (although admittedly these have been largely set off by QE)and it assumes that the Government could sell such large shareholdings on the market. I think it is inevitable that the Government will need to break up Lloyds and possibly RBS as well to meet competition requirements and create a competitive market for retail banking and mortgages in the country. Whether that will be a profitable (for anyone except the City) or capital destructive process it is too early to say. 55% looks a little pessimistic at the moment but some losses are to be expected.
I must say I too was wondering about the 6.4% increase in spending this year in the leaked document. I would appreciate an analysis of whether this reflects the capital cost of these forced investments or not. Surely its not just a crude pre-election bribe?

Hereford

Hysteria: I agree, but I feel the Spectator has become less clear on where it stands and more diffuse in opinion than it was. It used to be clearly right wing, but feels more centerist to me now. But perhaps thats a good thing?

herbby

Im definately of the opinion that despite the banks charging interest rates that a so high high its stupid they still have enough savings to cope!