And the result is, as you would expect, not pretty.
Let’s talk absolute cash – it’s value changes over time. In percentage terms our deficit is way below the level in the 50’s and 60’s.
If we were to be talking \”absolute cash\” then we might talk about nominal amounts of cash: and our deficit is absolutely huge by such a measure. Or we might, if we were to be picky, talk about inflation adjusted cash: by which measure our deficit is again absolutely huge.
If we are to talk about the deficit as a percentage of GDP of course this is not \”absolute\” in any manner. This is relative, by definition, as we are looking at the size of the deficit relative to the size of the economy.
Which leaves us with a further interesting question. Is our deficit small in realtion to hte size of the economy as compared with the 50s and 60s?
Hmm, ONS tells us that the deficit last year was a shade over 11% of GDP (and this year much the same is expected, no?).
As the IFS tell us (page 2 chart) the deficit post war ran from -2% (yes, Atlee ran budget surpluses) to 8%. And in the 50s and 60s the highest deficit was 4% ish of GDP (at the point when we were fighting a real, large scale, ground war in Korea recall).
So, no, the current deficit is not \”way below\” the levels of the 50s and 60s. It\’s actually near three times the peak deficit of those years.
But of course what Richard actually means is the national debt, not the annual deficit. Which was indeed very high in the 50s and 60s (figure 3 on page 5 of the IFS report).
But someone who cannot tell the difference between a deficit (a flow) and a national debt (a stock) really shouldn\’t be commenting on economic statistics, should they?
Or even on economics, if truth be told.