Government on the Never Never

March 22, 2013 in Economy, Financial, News Correspondent, Slider by News Correspondent


Imagine, for a moment, that you have severe debt problems – that you can’t extend your overdraft, that you have “maxed out” on credit cards and can’t get a loan for love or (certainly not) money from anyone. In desperation you consult a financial adviser – whose considered opinion is that you need to borrow even more money, perhaps by taking out a new credit card, in order to overcome your current cash flow problem leading – eventually – to you becoming debt free. Sounds like nonsense doesn’t it.

Yet this is exactly the insane “strategy” that the government is following – as revealed in today’s budget.

Osborne’s cunning plan appears to be that of carry on borrowing to avoid economic misery before the next general election and then of keeping fingers firmly crossed for an unprecedented run of economic growth, lasting for a decade or more – on a scale comparable to that of the post war German “economic miracle”.

Unfortunately there is absolutely no reason to think that it is going to happen – why should it?

All that George Osborne is achieving with his borrowing is to lumber future generations of Britons with crippling levels of debt.

According to the government’s department of “Wishful Thinking” this country is going to experience economic growth of 1.8% next year, 2.3% in 2015, 2.7% in 2016 and 2.8% in 2017 – this, remember, being the very same government that could not even accurately predict the growth over the last year and has, subsequently, halved its growth prediction to a miserable 0.6%.

This being the same government which has to borrow a further £6 billion this year (on top of the £108 billion it has already borrowed) and intends to borrow at least another £350 billion by 2017 – all of which will have to be repaid at interest by ourselves, our children and our grandchildren.

To put matters into perspective sovereign public debt (as a share of GDP) will rise from a “mere” 75.9% presently to an astounding 85.6% in 2016/17. As these are official government figures it can be taken as read that they are “best case” gross underestimates.

As bad as the above statistics appear (and are) the fact remains that these dreadful figures assume that the economic situation in Europe and beyond does not significantly deteriorate further – if not nosedive. Should that happen no amount of borrowing is going to save this country from economic meltdown and social upheaval on a scale not witnessed in centuries.