The 29th June 1966, a date that will not loom large in the annals of modern history, not say like the 6th June 1944 (D Day) or the 15th June 1815 (Waterloo) but nevertheless a significant one because on that day Barclays launched its eponymous Barclaycard, the first credit card issued in Britain and the start of a dependency on debt which has become ingrained in our national culture at all levels . . . . .
As an avid fan of question time (a great chance to unleash my angst at the TV) I tuned in as ever last Thursday. George Osborne had just released his annual statement so Britain’s debt burden and the approaches on how to deal with it were very much on the agenda for topical debate and some lively argument and there was plenty of that. One of the panellists (ever so slightly on the right hand side of the political and economic spectrum) made the quite sensible point that actually despite all the hype, the government wasn’t actually doing very much, kind of fiddling about at the edges of oblivion if you will. It sure got me thinking and here are some basic facts to help you do the same:
As at the 31st May 2013 Britain’s NATIONAL DEBT stood at £1.189 TRILLION (YES YOU HEAR ME CORRECTLY!!!);
The DEFICIT which is a word used by politicos to fool us all into thinking that this is actually the national debt is in fact running at £120 billion per year (albeit less than it was in the dog days of New Labour), and just to be crystal clear on this, the DEFICIT is the amount by which the national debt is actually increasing annually it is NOT the national debt itself;
The cost of servicing this debt is about £60 billion per year and rising which is twice the defence budget; and
The national debt is about 75% of Britain’s entire (legal) output (GDP)!!!
Now this is quite some achievement in the 47 years since the 29th June 1966 and is seriously scary. The real worry is that one day and maybe soon, cheap credit will run out and debt costs will start to rise because the appetite for these instruments is finite particularly as quantitative easing is diminishing the value of treasury bonds (basic rules of supply and demand I’m afraid) and when this happens the government (and therefore WE as a nation) will be in serious trouble and then a more radical approach to restructuring the whole state and its expenditure will have to ensue. This in turn will reduce growth and in the short term and make the problem worse and millions more people will suffer appallingly.
Difficult decisions indeed, and maybe politicians of all parties should be looking at this now as opposed to pretending that we the general public don’t understand basic economics and start treating us to the truth by presenting various alternative strategies that may have to be examined. Problem is with modern democracy (and I am a fan) is that policy is dictated by the sound bite and an election every four or five years. Any one for benign dictatorship!?
Think on it readers!
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