Our National Debt

steampowered

michaels wrote: »

When the coalition took over in 2010 the deficit (not debt) was well over 10% of GDP. Labour were proposing cutting the deficit more slowly than the Tories.

The argument at the 2010 election was that the Tories wanted to cut an additional £6bn compared to Labour in the next fiscal year.

As the deficit is currently running at £70bn it was only ever an argument about the bits around the edges really.

The Tories said they wanted to use that £6bn to stop a minor national insurance increase. But they then implemented pretty much the same increase a few years later anyway.

Personally I'm not really seeing an enormous difference between the parties on this. I guess we'll see if a difference opens up when we have more financial details about Corbyn's spending plans when we get closer to the 2020 election.

wotsthat

michaels wrote: »

When the coalition took over in 2010 the deficit (not debt) was well over 10% of GDP. Labour were proposing cutting the deficit more slowly than the Tories. How many people think the coalition cut spending by too little? (The reason the deficit was so large is because Labour thad set up the fiances based on a boom year being a nromal year and handed out money all around on that basis).

2010 was 7 years ago. We can argue about how much labour policy forced the incoming government to overspend and maybe give them some grace but how long for? There's a general reason why governments run deficits and that's because they want to and not because they're forced to.

michaels wrote: »

Of course the big question is why given record employment, a recovering economy and record levels of taxation there is still a deficit?

The government are spending too much.

michaels wrote: »

The simple answer is demographics, the agign population means that even though govt expenditure on providing services ahs been frozen/cut and working age benefits trimmed, payments to pensioners appear to be unsustainale and becoming more so.

Is there a solution? Yes, combine tax and NI setting the lower NI threshold to the basic rate tax free threshold, removing the NI upper limit and setting the new tax (plus NI) rates to a level to close the current deficit.

Faced with evidence that record levels of taxation are being achieved and the presence of a large deficit I'd be inclined to think any further taxes would be spent on stuff rather than deficit reduction.

Thrugelmir

Filo25 wrote: »

The coalition went heavy on austerity for the first half of the parliament, the economy slowed significantly, as you would expect with such a sharp fiscal tightening, and then they eased up on it.

Public sector pay is still only rising by 1% per annum until 2020.

There's much work going on behind the scenes to improve productivity, procurement etc. Slow slow process though. After the initial slash and burn which picked off the easy wins. Now it's more a war of attrition.

[Deleted User]

Jon_B wrote: »

Because the bank bailout and associated previous overspending resulted in a national DEFICIT between income and expenditure.

That line will not start to level out until the deficit is reduced to zero. Our deficit when the coalition came to power was somewhere in he region of £120bn. It's now around £60bn.

This thread is the very evidence that labour supporters do not understand the simple economics around debt. Please stay away from the Debt Free Wannabe boards.

But Osborne promised in his very first budget that austerity would reduce the deficit to zero by 2015, he kept moving that date budget after budget and now the new chancellor isn't interested in a zero deficit during this parliament (unto 2020) and seems to have no idea when he may (if ever) achieve this.
Even the sale of our shares in most banks haven't helped reduce the deficit and spending plans for the next 10 years, HS2 trident etc appear to project a deficit even as late as 2025.

Thrugelmir

venison wrote: »

the new chancellor isn't interested in a zero deficit during this parliament (unto 2020) and seems to have no idea when he may (if ever) achieve this.

No one said it would be easy to balance the books. Majority of events are outside the control of the Chancellor. Policies can set the course but not the outcome. To think otherwise would be daft. Setting objectives is as much about giving confidence to overseas investors so that they will continue to lend the UK money. As the UK is highly dependent upon the charity of strangers.

antrobus

wotsthat wrote: »

2010 was 7 years ago. We can argue about how much labour policy forced the incoming government to overspend and maybe give them some grace but how long for? There's a general reason why governments run deficits and that's because they want to and not because they're forced to....

"‘I’m afraid there is no money".

That's all anyone needs to know.:)

https://www.theguardian.com/commentisfree/2015/may/09/liam-byrne-apology-letter-there-is-no-money-labour-general-election

antrobus

venison wrote: »

But Osborne promised in his very first budget that austerity would reduce the deficit to zero by 2015, he kept moving that date budget after budget and now the new chancellor isn't interested in a zero deficit during this parliament (unto 2020) and seems to have no idea when he may (if ever) achieve this....

It's very easy to spend money and jack up the deficit. It's very hard to engage reverse gear. From what I can see, this year's deficit is supposed to be 3.5%, which is a lot better than the 10.8% it was when Gordon Brown was kicked into touch.

I'd call that progress.

venison wrote: »

..Even the sale of our shares in most banks haven't helped reduce the deficit and spending plans for the next 10 years, ...

We only own shares in RBS and Lloyds. We have sold off much of the Lloyds stake, but still own over 70% of RBS. The problem with RBS is that it is still a loss-making heap of junk, thus the shares would be sold at a loss.

P.S. The sale of shares might reduce the national debt, but it only effects the deficit to the extent that you make a profit or loss on the deal.

venison wrote: »

....HS2 trident etc appear to project a deficit even as late as 2025.

I'm not convinced that "HS2 trident etc" are the issues.

Pensions, health care, and welfare are were you find the largest spending, that's over 50% of the total of £784 bn. That's where the money goes, and they are all things that are very difficult to cut.

[Deleted User]

Thrugelmir wrote: »

No one said it would be easy to balance the books. Majority of events are outside the control of the Chancellor. Policies can set the course but not the outcome. To think otherwise would be daft. Setting objectives is as much about giving confidence to overseas investors so that they will continue to lend the UK money. As the UK is highly dependent upon the charity of strangers.

I beg to differ Osborne in 2015 told is it would be easy that he would do it and that it could be done, when anyone with half a brain cell knew that austerity was a recipe for economic disaster, and how right we have been proven.

[Deleted User]

antrobus wrote: »

"‘I’m afraid there is no money".

That's all anyone needs to know.:)

https://www.theguardian.com/commentisfree/2015/may/09/liam-byrne-apology-letter-there-is-no-money-labour-general-election

So a "business" with a £800 billion turnover has no money? That was the moment I realised that the coalition was doomed to fail, after all in tough times a little humour goes a long long way

antrobus

venison wrote: »

I beg to differ Osborne in 2015 told is it would be easy that he would do it and that it could be done, when anyone with half a brain cell knew that austerity was a recipe for economic disaster, and how right we have been proven.

So "austerity was a recipe for economic disaster"? So how come the IMF says we have the fastest growing economy in the G7? How come we now have the highest employment since 1971?

What colour is the sky on your planet?:)