Our rising debt burden

Dimoto

The difference of course, being that the Labour tax increases and "cuts" were just notional pie-in-the-sky, and their growth forecasts were ludicrous.
Would be interesting to see the Labour projection under the new growth forecasts and the likely outcome of Brown/Darling tax increases and fudged cuts.
20-30% increase in borrowing compared to Darling's "estimate" anyone ?

HalcyonDays

I don't think it's quite as important if the debt is rising in mere cash terms. The important point is that it will fall as a proportion to the size of the economy (assuming this happens). Has happened all the time in other countries and is regarded by markets as generally OK.

alexsandr

Just shows Osbourne is not cutting enough
Where were the public sector pay/job cuts in todays budget?

TrevorsDen

What it 'just shows' is the depth of the hole labour have left us in. The notion that you can just turn off the spending tap or push the spending genie back in the bottle is absurd. It cannot be reduced easily. We took decades to pay off the debts for WW1 and WW2. We have just unleashed massive borrowing. For all the talk about reducing the deficit we need to get into surplus before we can start to recuce the debt. How far away is that?

TomTom

The important point is that it will fall as a proportion to the size of the economy

Need quite a lot of Inflation and Devaluation to achieve that. It is not as if Britain is going to experience Export-Driven Growth as it is locked into slow-growing sectors, and the economy has been driven by Housing and Banking for at least 2 decades.

So in REAL terms the Debt Burden will climb unless Government finds a way to run budget surpluses over a couple of decades and that requires Import Controls.

Forget the Past. This is the Future. China is The Workshop Of The World and exports Tariff-Free and has no economic costs of Social and Welfare Rights but will happily sell manufactured goods to people on welfare in the West and welfare guarantees a very high standard of consumption in global terms

HalcyonDays

I agree with TrevorsDen. However, experience shows that if, over a number of years, the economy can grow faster than the rate of debt growth, the position can turn around surprisingly quickly. Of course, we need to aim for a few years of surplus as well, but a deficit that reduces in a static ecoonomy or one that stays steady in a growing economy is not by definition a huge disaster. Moreover, a judicious bit of inflation would also be useful in inflating away the real value of the debt. It's hard to imagine that rates will remain this low for more than a year or two more, though if the pound stays steady following market approval with this budget, this will take longer.

It's possible that attention will move towards the US fiscal and financial situation in this year's second half (absent major sovereign debt issues elsewhere), and if the dollar falls, the pound will rise, which we don't really want.

Dan Grover

alexsandr: How do you cut jobs in a budget? Sack Mary Smith from the Brighton and Hove SureStart center by name? Osborne has cut department budgets - how the departments deal with that (sackings, no more ontakes, pensions, less pencil sharpeners etc) is up to them.

Neil Wilson

Tom,

It doesn't need import controls. It needs an understanding of what a free floating exchange rate gives a country.

Forget the debt, stop borrowing and crowding out businesses, create the necessary money and tax effectively to control inflation.