Welcome to my blog. I am a former local journalist who now works in PR and a Conservative and community activist in Woking and Horsell. This blog will keep updated on local issues as well as my interests and quirky news stories.
One of the key things in the the Pre-Budget Report was the headline to “halve Britain’s deficit” during the next four years, bringing this down from 12% of GDP where it currently stands (up from 2% in 2007) to 6.5%. In other words we are going to reduce the £180bn-a-year borrowing levels to something more “manageable”.
But this is not the same as reducing the deficit ie paying back what we owe – it simply indicates that the government, over the next four years, wants to reduce borrowing to £90bn a year, adjusting for inflation. During that time, of course, they could have borrowed the best part of £600bn more.
It doesn’t pay off the amount borrowed – it doesn’t even pay off the interest – it is simply a commitment to reduce the future levels at which we borrow. Strangely, this distinction doesn’t seem to have made it past Tom Clark in The Grauniad, as the paper happily swallows the government lines that Labour is to “halve the deficit”.
The total figure for what Britain owes is not easy to find but one must assume it is heading towards £1trillion. In addition, the nation has promised £2trillion in public pensions that it doesn’t have.
What the government is actually doing is spending £100 on a credit card every month. It used to spend £20, but the recession meant it needed to borrow more. It has not paid any of the money back and is intermittently paying back bits of interest. The bank is watching closely to see if the credit limit should be reduced. So the government is now looking to reduce its spending to £50 within four years. It is not saying that half the total amount on the card will be repaid.
That isn’t the impression left by James Lansdale on the “full story of the pre-Budget report” on the BBC, or even by the Daily Telegraph, who also seem happy to take the government’s suggested wording.
What the government is seeking to do is halve year-on-year borrowing, nothing else. It might help if journalists read the report itself rather than the Treasury’s press release, or even understood a little bit about how the economy works.
