If the Chancellor do anything useful today he could start by trying to change the political debate about debt, although I doubt he wants to.
I think I am right in saying that the UK government has only paid back debt, that is paid back more than it borrowed in three years since 1945, quite possibly by mistake. The UK still pays interest on debt from WW2, WWI and even the Napoleonic wars, if not earlier.
Any government which stifled its economic growth in an attempt to repay debt it can easily afford would be mad. That is why all this talk about the credit card being maxed out, government finances being like a family’s and debt having to be repaid are all so unhelpful. They are just plain wrong and are pushed forward by those who want to permanently keep the state small and taxes low.
Raising taxes now would be silly, it will slow the recovery and the government doesn’t need to raise taxes or slash spending to pay back debt, it just has to have debt rise more slowly than the size of the economy.
This is what governments have always done, this new idealogical obsession with debt is damaging as George Osborne proved. Still it is the new orthodoxy, so I assume the country will have to suffer as a result.
https://jonty.substack.com/
Budgeting for debt.....
Well I'm surprised Jonty I never had you as wistful for the Thatcher years! :)
If the GDP takes a hammering as a result of the EUs attack on Brexit we may have no choice but to pay some dedt down. 85% of current GDP as debt is a bit higher than I would want and if GDP takes a bashing thanks to the EU then we need to juggle the finances a bit. There is also no slack left in the system for the next crisis.
Furlough has to be paid for and people understand that and are prepared for that at this moment in time taxationwise. It can be a slow rachet up year on year on taxation but there has to be a route map to a better debt position whether that is because of greater CPTPP trade turnover or worse EU trade.
I think the EU is nuts cutting off its own nose to spite its face as they will hurt themselves. They will need some serious plastic surgery to overcome the self inflicted disfigurement. Teaching the UK a lesson could hurt them more than us time will tell.