Saturday, March 03, 2018

After sixteen years Britain is finally out of the red on current spending

A huge milestone on the path to financial stability has been passed as Britain is now back in the black on day-to-day spending.

The current account budget – which includes expenditure such as running hospitals, but not one-off capital costs such as major building projects – ended last year with a £3.8 billion surplus, its first since 2001.

Under Gordon Brown's so-called "Golden Rule" this would mean that the books were balanced.

I am not that complacent (and neither is the Conservative government.) Britain has accumulated a dangerous level of debt over the past seventeen years and consequently has to pay a ghastly proportion of current spending in interest on that debt.

Having reached the first target of merely covering current spending we need to continue to improve Britain's fiscal position so that we can move towards, and eventually reach and pass, the point where the government starts to actually pay back debt. I would not support "slash and burn" policies to get there as fast as possible at the risk of tipping the economy into recession but we definitely need to get to the position where over the economic cycle we pay back more debt that we borrow.

Hence there is much more to do but this represents a massive success for successive Conservative chancellors who inherited a diabolical financial position and have made real progress on the road to recovery.

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