Despite the sophistry of the Budget speech, the fact remains that Britain—after 10 years of solid economic growth—still has an enormous stock of debt, around 40 per cent of GDP. Moreover, it’s growing; this year there will be another £15 billion of borrowing to fund a bloated and enormous state. Darling made many comparisons to the state of British finances in the 1980s and early 1990s, but these comparisons through time are completely unfair given the different state of the economy then.
The more relevant comparison is to that of other governments since Labour came to power. The Institute of Fiscal Studies tells us that of 21 comparable countries, 19 have done more to improve their structural budget balances and 16 have done more to reduce their debt burden than Britain has.
The contrast with Australia is the most acute. Australia had a similarly high public debt when John Howard’s Liberal Party came to power in 1996. Over the course of ten years the debt was completely paid off, without any notable hardship. Both Australia and Britain have more or less experienced similar levels of growth since that time and both operate generous welfare states, yet New Labour has run deficits in almost every year it has been in office.