The first of the Tory chancellors, George Osborne, inflicted crippling austerity but also failed to invest when money was cheap. He could have taken advantage of historically low interest rates to renew Britain’s infrastructure, especially outside of the south-east. Instead, while claiming to be “fixing the roof while the sun was shining”, he increased the national debt by 13 per cent of GDP – equivalent to £400bn in today’s money – and locked Britain into an inflation-sensitive debt trap by issuing far more inflation-linked gilts than any other major economy.
That decision, at a time of zero interest rates, now costs the country billions each year and will constrain future governments for years to come.
It’s bad that debt has risen as a percentage of GDP but Osborne’s mistake was not to borrow more.
And compounding these headaches for the Chancellor is yet another legacy of Osborne’s: the deal he struck on how quantitative tightening is managed. As the Bank of England actively sells down its QE portfolio, the Exchequer is making huge losses as it subsidises the bank for losses it makes on the sale of gilts. The OBR estimates a net loss of a staggering £21bn this year – almost the same amount as given to the NHS at the Budget last October – and £134bn over the lifetime of the programme.
And we couldn;t borrow more at near zero anyway. Because it was the Bank of England buying most of the gilts – so borrowing more then would just mean having to do more QT now. Which isn’t a grand solution.
Sigh.
Perhaps Ms. Haigh should go back to knicking phones?
First paragraph explains why this is the most unpopular government since they killed Wat Tyler:
Labour was elected in 2024 to rebuild Britain – not to steady the ship, but to remake it completely
Yeah, no.
Labour should implement her ideas. The sooner the IMF have to step in, the sooner we’ll be rid of the thick twats in government.
“crippling austerity”: and yet she claims that government debt went up. She doesn’t go in for intellectual consistency then? She should stick to nicking mobile phones.
On the other hand, is nicking mobile phones a greater or less moral enormity than converting a personal tragedy into a taxpayer-funded ATM? Deputy leaders, eh?
When the press report on her drivel they should convert all the figures into the number of iPhones it represents.
Despite the evidence that they’ve been confronted with since being elected they still think the Tories were stupid enough to implement austerity (which it wasn’t), deliberately failed to throw that level marked growth that’s located somewhere in the treasury and even deliberately failed to fix the small boats problem as a deliberate trap for Labour.
.
The silly cow has bright red progressive hair. Brightly-coloured hair is fine on teenagers on students; on grown women it’s a surefire sign of a silly womanchild. One cannot take such women seriously.
Nicking mobile phones increases GDP as the nickee has to replace the phone, the nicker sells it on, plod investigate the case and writes it up, insurance companies process the claim, and insurance premiums get charged.
And the state gets the VAT
If Frédéric Bastiat was alive today he’d probably be writing about the nicked phones fallacy.
Bastiat would observe ( or not observe because the transactions that don’t happen are hard to measure ) the reduction in GDP due to becoming a lower trust society.
“He could have taken advantage of historically low interest rates to renew Britain’s infrastructure, especially outside of the south-east.”
Which is basically code for “trams and trains”. Which no, nowhere outside the South East needs more of.
Where was this ‘crippling austerity’? Just whom, exactly, did it cripple?
Taxpayers.