Following the 2010 general election, Chancellor George Osborne and Danny Alexander, his Lib Dem assistant, argued that Britain’s indebtedness was as bad as that of Greece. Our own Greg Mulholland has parroted the same line, trying, typically, to implicate the Labour party.
So British debt like Greece?
Well it wasn’t and it isn’t and it won’t be.
As it happens, neither important international organisations such as the International Monetary Fund nor national ones like the Institute for Fiscal Studies agree with Osborne and Alexander.
These organisations do think there is a problem with debt in the UK. There obviously is. Too many people have acquired too much personal debt in the guise of mortgages and credit cards, for example.
And, of course, the previous Labour government had to bail out the corrupt and corrupting banking system at the cost of hundreds of billions of pounds.
So what can be said about Britain’s indebtedness?
Will Hutton, one of Britain’s top economists and Principal of Hertford College Oxford, is the latest person to make the case that the government is mis-managing the economy in general and the debt in particular.
In an article written for The Observer (26/06/2013), Hutton argues that although the Government keeps telling us that Britain is broke, in point of fact it isn’t! In debt, yes! Broke, no!
The following comments draw heavily on Hutton’s article.
He argues that instead of comparing ourselves with Greece, the UK should compare its economy with the other world, including major European, economies. He points out:
1. All countries must be in a position to pay off their debts. Hutton says, ‘Britain’s financing needs – that is the combination of meeting the public deficit in any financial year together with refinancing government debt that matures every year – are running at 13% of GDP, roughly half the average of the Group of Seven countries.’ These countries include Germany, the States and France. In short – Britain’s debt is manageable in the short term.
2. ‘Government debt is very long term: at more than 14 years, it is the longest of any advanced industrialised country. Better still, only 30% is held by non-residents compared with an average of more than 50% for other (economically) advanced countries, so the debt is more grounded in British ownership.’ In short – Britain’s debt is manageable in the long term.
Hutton argues that taken together, ‘this means that Britain, far from being in Greece’s desperate plight, has the best protected public debt position of any country of the world’s top 30 economy. It is the least likely to suffer any speculative attack.’ He continues, ‘We do not have to rival the Greeks in a crash austerity programme. All the stuff about tough but necessary hard choices, not passing on too much debt to the next generation, is hogwash. It is a highly selective marshalling of facts to support an ideological crusade against the state.’
We have become used used to Ministers, such as Iain Duncan Smith, and senior Tory officials, such as Chairman Grant Shapps, misusing and abusing statistics with regards to welfare and house building.
Such mendacity is the stock in trade of the Coalition Government.
And we all remember Cameron’s claim that there would be no top-down restructuring of the NHS.
So we shouldn’t be surprised to discover that the whole austerity package of Chancellor Osborne and Lib Dem Danny Alexander is just a front to destroy the welfare state that the elderly, the young, the unemployed, the disabled rely on.
Thanks to the support of the Liberal Democrats, the Tories are on course to do just that.
Hutton claims that, ‘We are governed by charlatans.’
Who could disagree?
[Read Hutton’s complete article here.]
[You can read previous posts on this issue on Adel and Wharfedale’s website ‘Forget Greece – Remember Iceland’, published 31. 12, 2012 and ‘What would you do without Greece, Mr Mulholland – learn some economic facts, perhaps’ published 14. 1. 2013 – http://awlabour.wordpress.com or http://awlabour.info%5D