We here in the YUK have been hearing much about our budget deficit in recent days. The reason? The Conservative and Unionist Party are having their annual conference.
We have a deficit in the YUK because the government spends more every year than it raises in taxes. It then makes up the shortfall by borrowing money on the open market, selling bonds (called ‘gilts’) to those willing to buy them. (Exactly the same happens in the land of the free, where government bonds are referred to as ‘treasuries’.)
The present administration points out that this habit cannot continue indefinitely because, if it does, our children and grandchildren will be picking up the tab – which is plainly unfair. So they are attempting to eliminate the deficit entirely and, three years in, claim to have reduced it by a third. But the remaining two thirds are still there, which means further borrowing every year. And the word we are not hearing from anyone is ‘debt’. Which is strange because, as we borrow more, so our national debt increases.
Addressing his party conference the top political money-man (known in the YUK as the Chancellor of the Exchequer) made a bold commitment. After eliminating the deficit, George Osborne stated that his goal is to start building up a surplus. That is, he intends to bring in more in taxes than he spends. He intends to be in a position ‘to fix the roof while the sun is shining’. He will be able to pay for new slates and gutters without borrowing the money to do it.
Right. Well and good. But I have now heard several interviews on this subject and not once has the interviewer asked how George could afford to do this given the present size of the national debt, let alone how much greater it will be several years down the line when the deficit is finally eliminated.
And we are not talking ten pounds here, but a truly colossal sum of money. We now owe in excess of £900 billion, and that figure excludes bank bailouts. We owe £19,034 for every man, woman and child, which is more than £42,084 for every person in employment. Every household will pay £1,906 this year, just to cover the interest. (Source: UK Debt Bombshell)
So if we ever get to the point where we have a budget surplus, it seems fairly obvious where the surplus money will have to go. Because, as the politicians know but don’t like to tell us, even as the deficit falls the debt keeps rising and it has to be paid for.