If we had a responsible opposition they would sound like this ...
I don't necessarily agree with everything in the article published yesterday evening on the Telegraph website by Alistair Heath, editor of "City AM." But his argument that "There's a worse crisis on the way unless we get serious about tackling debt" shows him to be far more qualified to be shadow chancellor than Ed Balls or Ed Miliband.
It doesn't make cheerful reading but his basic argument that the government and many parts of the private economy are still borrowing far too much, and that we are still in danger of drowning in debt, has far too much truth in it.
As he writes
It doesn't make cheerful reading but his basic argument that the government and many parts of the private economy are still borrowing far too much, and that we are still in danger of drowning in debt, has far too much truth in it.
As he writes
"Families and companies have only just started down the long road towards
fiscal responsibility, with the belt-tightening likely to continue until the end
of the decade; and the public sector is still adding more to the national debt
pile every week than the private sector is repaying."
"We still aren’t remotely living within our means ..."
"Household debt has fallen from 111pc of GDP at the start of 2009 to 99pc at the end of last year, according to official data analysed in a recent note by Michael Saunders, Citigroup’s brilliant economist. For private firms excluding banks, debt has dropped from 121pc of GDP to 108pc.
"This is a decent readjustment, with individuals and businesses trying to put themselves on firmer footings – and helps to explain why banks’ net lending remains relentlessly negative – but this process has much further to go.
"Together, families and non-financial firms’ debt is still worth 208pc of GDP and is merely back to levels last seen in mid-2007, a time when leverage was already utterly unsustainable. Current debt levels remain much higher than they were a decade ago (170pc of GDP) and 15 years ago (128pc of GDP).
"Nobody knows what the “right”, sustainable level of private sector debt is, and it depends crucially on expected productivity, wage and jobs growth, as well as on inflation, but it is certainly far lower than today’s levels.
"Only Greece, Cyprus, the Netherlands, Portugal and Cyprus currently have more private debt (as ever, excluding the banking system) than us, a horrible reality which shows that the British should not mock the woes of mismanaged, peripheral eurozone nations."
"We would have gone bust and had to beg for a bail-out had we joined the single currency and been unable to rely on quantitative easing."
He adds that the impact which the interest on all this private debt could have on the British economy when interest rates return to something like normal levels is equivalent to our economy resting on a "bed of nitroglycerine."
Then he gets started on the public debt and defecit and really gets going ...
"It gets worse. The Government has increased its own debt burden so much that this has more than compensated for the deleveraging by families and private firms. General government debt has reached 90pc of GDP, up from 43.5pc when the crisis erupted in mid-2007.
"Combined UK private and public debt (as ever, excluding the balance sheets of City banks) therefore reached a recent record of 298pc of GDP at the end of last year, higher than the eurozone average of 268pc.
"Total debt levels only rose moderately in the UK between 1987 and 1997, increasing from 144pc of GDP to 178pc of GDP. They then started to shoot up, hitting 207pc of GDP five years later and 253pc at the start of the crisis. When Ed Balls insists, as he did this week, that the last Labour government didn’t spend too much and didn’t push the national debt too high, he is focusing exclusively on the government’s official, on-balance sheet national debt prior to the crisis.
"But Gordon Brown fostered an unsustainable private sector credit bubble, grabbing a large chunk of the proceeds as tax. When the music stopped, the economy collapsed and the public finances were left with a gaping hole."
"Unless we become serious about tackling private and public debt, the next crisis, when it eventually comes, will be unimaginably devastating."
You can read the full article here.
If Ed Miliband, Ed Balls, Jamie Reed, and most of the rest of the Labour party had the requisite number of working brain cells or reponsibility to be fit to be parish councillors, this is the direction from which they should be criticising the government instead of faffing around with proposals which might save £100 million a year, e.g. 0.01 percent of public spending, while promising £10 billion of utterly unsustainable tax cuts.
The coalition is not perfect. There is still much, much more to do to cut the defecit before we can even start to cut debt to sustainable levels. But at least the present government have cut the deficit and show some signs of understanding the problem. Labour don't. Putting them back in charge of the economy would not just be like handing the keys of the car back to the people who ran it off the road, it would be the economic equivalent of playing Russian Roulette with six loaded barrels.
"Household debt has fallen from 111pc of GDP at the start of 2009 to 99pc at the end of last year, according to official data analysed in a recent note by Michael Saunders, Citigroup’s brilliant economist. For private firms excluding banks, debt has dropped from 121pc of GDP to 108pc.
"This is a decent readjustment, with individuals and businesses trying to put themselves on firmer footings – and helps to explain why banks’ net lending remains relentlessly negative – but this process has much further to go.
"Together, families and non-financial firms’ debt is still worth 208pc of GDP and is merely back to levels last seen in mid-2007, a time when leverage was already utterly unsustainable. Current debt levels remain much higher than they were a decade ago (170pc of GDP) and 15 years ago (128pc of GDP).
"Nobody knows what the “right”, sustainable level of private sector debt is, and it depends crucially on expected productivity, wage and jobs growth, as well as on inflation, but it is certainly far lower than today’s levels.
"Only Greece, Cyprus, the Netherlands, Portugal and Cyprus currently have more private debt (as ever, excluding the banking system) than us, a horrible reality which shows that the British should not mock the woes of mismanaged, peripheral eurozone nations."
"We would have gone bust and had to beg for a bail-out had we joined the single currency and been unable to rely on quantitative easing."
He adds that the impact which the interest on all this private debt could have on the British economy when interest rates return to something like normal levels is equivalent to our economy resting on a "bed of nitroglycerine."
Then he gets started on the public debt and defecit and really gets going ...
"It gets worse. The Government has increased its own debt burden so much that this has more than compensated for the deleveraging by families and private firms. General government debt has reached 90pc of GDP, up from 43.5pc when the crisis erupted in mid-2007.
"Combined UK private and public debt (as ever, excluding the balance sheets of City banks) therefore reached a recent record of 298pc of GDP at the end of last year, higher than the eurozone average of 268pc.
"Total debt levels only rose moderately in the UK between 1987 and 1997, increasing from 144pc of GDP to 178pc of GDP. They then started to shoot up, hitting 207pc of GDP five years later and 253pc at the start of the crisis. When Ed Balls insists, as he did this week, that the last Labour government didn’t spend too much and didn’t push the national debt too high, he is focusing exclusively on the government’s official, on-balance sheet national debt prior to the crisis.
"But Gordon Brown fostered an unsustainable private sector credit bubble, grabbing a large chunk of the proceeds as tax. When the music stopped, the economy collapsed and the public finances were left with a gaping hole."
"Unless we become serious about tackling private and public debt, the next crisis, when it eventually comes, will be unimaginably devastating."
You can read the full article here.
If Ed Miliband, Ed Balls, Jamie Reed, and most of the rest of the Labour party had the requisite number of working brain cells or reponsibility to be fit to be parish councillors, this is the direction from which they should be criticising the government instead of faffing around with proposals which might save £100 million a year, e.g. 0.01 percent of public spending, while promising £10 billion of utterly unsustainable tax cuts.
The coalition is not perfect. There is still much, much more to do to cut the defecit before we can even start to cut debt to sustainable levels. But at least the present government have cut the deficit and show some signs of understanding the problem. Labour don't. Putting them back in charge of the economy would not just be like handing the keys of the car back to the people who ran it off the road, it would be the economic equivalent of playing Russian Roulette with six loaded barrels.
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