Binge borrowers
Andrew Neil 1:51pm
The TV pundits still don't seem to grasp the enormity of the Chancellor's borrowing binge to come, all the more significant because of the borrowing binge we've already had. The sustainable investment rule, for example, is no more. It states that national debt must not exceed 40% of GDP. Even on the Chancellor's own forecasts it reaches 39.8% by 2010 which, given consistent underestimates of borrowing, means it will be broken. Add in all the off-budget items carefully squirreled away by this government -- from Northern Rock to PFIs to Network Rail -- and it will hit 45%. Busted!
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Comments
William Norton
March 12th, 2008 2:28pmDarling said that the extra tax on alcohol would come into effect on Sunday night. Doesn't it usually come into effect on Budget Day night? Is he trying to engineer a run on beer with everyone over-stocking at the weekend shopping trip?
Tapestry
March 13th, 2008 5:15amThe assumption amongst commentators is still that growth is a given. If a recession strikes, the borrowing will be far higher.
Geoff
March 13th, 2008 12:36pmWhat a crass comment, not worthy of a good journalist. The test of rules, such as the limit on borrowing, is whether they are broken in times like these. The truth is, this budget predicts we will come close, but not break the rule. Thats what you would expect. All the off-book stuff you mention, isnt included in the rule either. It would be entirely misleading to include northern rock, for example, and so the rule excludes it, supported i understand by the NAO.
cuffleyburgers
March 13th, 2008 5:28pmOh come on "Geoff", just leaving out stuff you don't want to include makes a nonsense of the whole exercise. Just admit they've cocked it up completely.
Selby
March 15th, 2008 12:12amGeoff is right, NR is so far the exeception to the rule of safe banking (and one that should establish that shareholders need to be actively involved in the workings of institutions that invest their money - not just bleet when the share prices/annual bonuses go down....). Good economists know - as should Andrew N that exceptions to the rule never make weak arguements any stronger - and so should not be included in any global picture or forecasts of future patterns of behaviour. I suspect Andrew scents blood and so will willingly talk us into a recession just to be able to preen "I told you so" journalism. Shame on you brillo....