Busting the single narrative the debt crisis as just another story – or why are we prey to a...
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Busting the single narrative the debt crisis as just another story – or why are we prey to a single narrative? 1
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Transcript of Busting the single narrative the debt crisis as just another story – or why are we prey to a...
Busting the single narrative
the debt crisis as just another story – or why are we prey to a single
narrative?
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“We were on the brink of bankruptcy…”
“You clearly need to make the savings, the cuts and raise taxes...”
Professor Joseph Stiglitz, Nobel Prize For Economics In 2001, Daily Telegraph 08.09.10
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Professor Paul Krugman, Nobel Prize for Economics in 2008, New York Times 21.10.10
“The best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997.”
Professor Christopher Pissarides, Nobel Prize for Economics in 2010, Daily Mirror 09.01.11
“The Chancellor has exaggerated the sovereign risks that are threatening the country.”
"I think it is likely that the economic downturn will last far longer and human suffering will be all the greater."
You can only understand how big debt is when you compare it as a
percentage of GDP
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The GDP in 2010 was……
£1.435 trillion5
“Our debt is higher than it’s ever been…”
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(Coalition Government)
60% of GDP
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64.6%8
• UK net debt is £952 bn• Excluding Financial sector
intervention, debt is £845 bn
•Or 57.1% of GDP!
Source: Office National Statistics (November 2010)
If you deduct what we gave banks, debt is even lower
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*This includes £100bn+ of the banks’ debts that is now UK Government debt
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Source: CIA World Factbook11
USA 95%
CANADA81%
GERMANY72%
FRANCE 77%
SPAIN70%
PORTUGAL 87%
ITALY 119%
JAPAN 200%
GREECE187%
UK65%
Source: CIA Factbook
“The Deficit is caused by overspending…”
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(Coalition Government)
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INCOMEMainly taxes
SPENDING Public services Investment Debt payments
Is spending too high or income too low?
Government
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Without the recession tax revenues should have been £100bn more than today.
The UK TAX take 1995-2010
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Growth
Deficit
Oct 2009 to March 2010
£22bn
“Interest repayments are higher than ever…”
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(Coalition Government)
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Conservative GovernmentConservative Government
Source: Public Finances Databank, ONS
• The Thatcher government paid the equivalent of £174m per day
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Thatcher Government
www.ukpublicspending.co.uk
SO WHY PAY OFF THE DEFICIT OVER 4 YEARS?
Our Borrowing is cheap, mainly from the UK and can be repaid over 13-15 years
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“We have to make cuts…”
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(Coalition Government)
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Is THIS where the deficit is?? We don’t pay enough in tax to cover what we spend.
Source - Eurostat newsrelease – June 22nd 2009
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THE GINI CO-EFFICIENT – UN MEASURE OF INEQUALITYTHE GINI CO-EFFICIENT – UN MEASURE OF INEQUALITY
Inequality
“What really caused the deficit?”
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Let’s not forget who’s to blame…
“…the billions spent bailing out the banks and the need for public spending cuts were the fault of the financial services sector."
(Mervyn King giving evidence to the Treasury Select Committee– 02.03.11)
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which iswhich is
Which raises some interesting questions........
The £995bn banking deficit is also equal to 350% of what the banks are worth.
How come banks can sustain a deficit 350% of their worth and the Coalition Government says the country cannot sustain a deficit of 58% of what we are worth?
Why are bankers calling for public austerity and deficit cutting when they sustain their own deficit of these proportions?
If we can help the banks pay off their deficit (here and in Ireland) why can’t they help pay off ours?
“It is likely that a substantial proportion of these schemes and investments will be with us for some time....In the meantime, the Government carries an estimated £5 billion a year cost of financing the shares and loans, and may have to invest more in the future to protect the current value of its investments.”
National Audit Office Report, December 2010
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Debt is low compared to our history and partner nations
Growth plays a key role in reducing the deficitIf tax is lagging behind spending, why not
borrow short term to encourage growth?What would 3% per year growth for 5 years
do to the deficit?
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• National debt? NO• Current account deficit? Depends on your
values - it’s political• Economic governance? YES• Employment? YES• Banking? YES • Democracy and public debate? YES
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OUR SOCIETY IS MORE THAN OUR ECONOMY
“The gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials.”
Robert Kennedy, 1968
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