Skip to main content

The UK: the spendthrift of Europe

The latest government borrowing numbers for the UK are spectacularly bad. To increase borrowing by 25% compared to the same month last year (excluding bank bailout costs) is a major failure for a government that must stand or fall by the way it tackles the deficit. Borrowing £10 billion in a month is not tackling the deficit, it is widening it.

Meanwhile the Bank of England has failed, yet again, to address the acceleration in inflation. They continue to pretend that a 4.5% inflation rate can be ignored because it is only a function of "temporary conditions". This is false- there is now a clear structural problem and the failure of the MPC to recognize this, still less to tackle it, is continuing to penalize savers. It also distorts the housing market in a way that is set to exclude an ever growing proportion of people from ever owning their own property. The fact is that, far from encouraging an orderly reduction of debt, the continued artificially low interest rates permits the UK, especially its government, to continue to live well beyond its means -if only for a few more months, .

UK debt, whether government or private sector, must be expanded no further!

Without a serious reduction in the total level of UK debt, the country faces a further lurch downwards. The continued expansion of public debt coupled with dangerously low interest rates will ultimately undermine the value of Sterling internationally - and lead to a crushing fall in the standards of living of those living in the UK.

The fact is that the right wing nutters who constantly predict the fall of the Euro should be paying a lot more attention to the disaster happening on their own doorstep. It is not just that the UK government is overspending, it is that the returns on what it is spending are pitiful. There is little infrastructure improvement, there is simply a giant job creation scheme: the kind of scheme that suggests that tax simplification should not happen because this would lead to tax inspectors being made redundant. The kind of waste exemplified by politicians who do not think a Police inquiry of Chris Huhne is enough: they want to spend millions on an independent inquiry, which would have no legal force and therefore be utterly pointless. People who want to waste public money on that scale are the ones that should be forced from office.

On an increasing number of measures, the UK now has a significantly worse fiscal and monetary position that the Eurozone. It can not go on like this. On current trends the British Treasury can expect the markets to have a heart attack within a matter of a few months.

Fine words butter no parsnips: without significant, radical action the Labour legacy of-out-of-control debt will destroy the prosperity of the nation. Indeed given the surge of the SNP in Scotland, it may even lead to the destruction of the nation itself.

The coalition must get a grip on debt now- failure can not be an option.

Comments

Popular posts from this blog

Concert and Blues

Tallinn is full tonight... Big concerts on at the Song field The Weeknd and Bonnie Tyler (!). The place is buzzing and some sixty thousand concert goers have booked every bed for thirty miles around Tallinn. It should be a busy high summer, but it isn´t. Tourism is down sharply overall. Only 70 cruise ships calling this season, versus over 300 before Ukraine. Since no one goes to St Pete, demand has fallen, and of course people think that Estonia is not safe. We are tired. The economy is still under big pressure, and the fall of tourism is a significant part of that. The credit rating for Estonia has been downgraded as the government struggles with spending. The summer has been a little gloomy, and soon the long and slow autumn will drift into the dark of the year. Yesterday I met with more refugees: the usual horrible stories, the usual tears. I try to make myself immune, but I can´t. These people are wounded in spirit, carrying their grief in a terrible cradling. I try to project hop

Media misdirection

In the small print of the UK budget we find that the Chancellor of the Exchequer (the British Finance Minister) has allocated a further 15 billion Pounds to the funding for the UK track and trace system. This means that the cost of the UK´s track and trace system is now 37 billion Pounds.  That is approximately €43 billion or US$51 billion, which is to say that it is amount of money greater than the national GDP of over 110 countries, or if you prefer, it is roughly the same number as the combined GDP of the 34 smallest economies of the planet.  As at December 2020, 70% of the contracts for the track and trace system were awarded by the Conservative government without a competitive tender being made . The program is overseen by Dido Harding , who is not only a Conservative Life Peer, but the wife of a Conservative MP, John Penrose, and a contemporary of David Cameron and Boris Johnson at Oxford. Many of these untendered contracts have been given to companies that seem to have no notewo

Bournemouth absence

Although I had hoped to get down to the Liberal Democrat conference in Bournemouth this year, simple pressure of work has now made that impossible. I must admit to great disappointment. The last conference before the General Election was always likely to show a few fireworks, and indeed the conference has attracted more headlines than any other over the past three years. Some of these headlines show a significant change of course in terms of economic policy. Scepticism about the size of government expenditure has given way to concern and now it is clear that reducing government expenditure will need to be the most urgent priority of the next government. So far it has been the Liberal Democrats that have made the running, and although the Conservatives are now belatedly recognising that cuts will be required they continue to fail to provide even the slightest detail as to what they think should guide their decisions in this area. This political cowardice means that we are expected to ch