Government borrowing is not simply a matter of ownership, it’s made up of several factors and as such it has different ways of paying it back. The most significant indicator of debt is its relationship between GDP and the amount we owe. Even then it’s a bit more complex than simply factoring one against the other. You also have to split how much real money is in existence and stuff like printing money to bail out the banks, which we did quite a lot of around 2008, and we didn’t crash Zimbabwean style.Is it just me or is anybody annoyed at the sums be bandied about re money and how much will be borrowed by the winning party? We all laughed yesterday at the Green figures, but McDonnell is taking the wee wee. After borrowing, who is going to pay it off?
Also Gideon Osbourne borrowed more money than every single chancellor since 1900 put together (£0.7tn became £1.4tn under his ‘austerity’ rules and Hammond topped that up to £2tn (approx Nov 2019 figure)). And didn’t crash the country, why? Because the overall GDP was a healthy figure during his time as he set about sorting out the housekeeping aka Thatcher style. And that is the really important aspect, National debt is the total amount the government owe, and balancing the books is about what the government spend on running the country on a daily/weekly basis.
Politico’s will always deliberately confuse balancing the books with the overall national debt, because they are afraid that the public will get wind that they are simple minded (MP’s that is) barstewards.
So turning now to planned government borrowing, first of all the taxpayer will pay back the debt through various forms of taxation. Particularly as the Government don’t run manufacturing or make anything for sale.
However there is a limit to just how much a even a government can borrow, and there is a cracking article about how to work out how much a country can borrow, but as luck would have it I can’t find it. never mind.
Turning now to spending plans, naturally the Conservatives have limited there spending plans (currently £25-50bn) to the GDP, which is an expression of the value of the country and the governments take. Currently the U.K. Plc is worth around £72tn, so an additional £50bn isn’t going to make any real impact on the rump of things. In fact Jarvid is being extremely cautious and could quite easily push that to £75bn, with no real hiccup on the economy. It is worth remembering that interest rates are currently .75% and governments can borrow at less than that. Currently Japanese bonds are 0% for 10 year bonds, that means you can borrow from the Japanese Government for 10 years and it won’t cost you anything but they won’t pay any interest of the money they borrow from you.
Unfortunately the same can’t be said for Magic Grandpa and his erstwhile Marxist lunatic who have planned to borrow £650bn over 10 years, this is the first 10 years of their government. And given that they are legally required to hold a general election every 5 years, is this an indication of a few gulags and JCZFD refusing to give up the keys to No 10? Of course as with all Labour Governments maths isn’t there best subject? Wilson, the last sensible Labour leader (for what it’s worth) actually borrowed over 30times the amount he said he would borrow. I can only assume building then scrapping TSR2 was a tad more costly than they planned for.
the problem with the dynamic nutters Is that they are planning to pass all this wealth from the bottom up rather than is normal the top down. Heaven knows what will happen when labour local councils get large amounts of money to play with (one-legged lesbian chicken loving anti-war cabels anybody?) the point is and given that interest rates are so low, that Labour could given everybody £1m and nobody would notice the difference in either national debt or day to day spending.
if you got this far, we’ll done and have you ever considered a career in economics?