True but unfair

The Treasury was forced to borrow a record amount in the first half of the present financial year as the Chancellor’s tax revenues continued to fall short of his plans, emphasising the mounting stress on the Government’s finances.

Total net borrowing by the Government from April to September soared to £37.58 billion, up drastically from the £21.46 billion figure for the same period in 2007-08, official figures showed this morning.

The all-time peak for first-half borrowing, the highest since 1946,

Well, yes, the highest since 1946 it may well be. But if we\’re not going to adjust for inflation then it\’s a pretty meaningless figure.

And there\’s another issue as well. Adjusting for the size of the economy. Borrowing at present in of the order of 3 or 4 % of the economy (very roughly) and it has been a great deal higher, 10 % and more (and while I can\’t remember what is was in 1946 it was a hell of a lot higher then).

 

4 thoughts on “True but unfair”

  1. With the economy now “contracting” (© Lord Voldemort) measuring borrowing against the size of the economy is going to get worse in both ends of the calculation .

    Wat Tyler will probably have a graph somewhere.

  2. But wasn’t there something special and unusual about 1946?

    Oh silly me, we’re not supposed to learn from history, are we?

    Otherwise we might recollect Jim Callaghan saying in 1976 “I tell you candidly that the option [of spending your way out of a recession] no longer exists…”

    You’d think they would remember their own party’s cockups, wouldn’t you.

  3. *bangs head against wall*

    In 1976, the option didn’t exist. That doesn’t mean that it doesn’t exist in 2008.

    Specifically, in 1976 nobody was willing to lend money to the UK government, whereas right now people are falling over themselves in their haste to do so…

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