Thursday, March 26, 2009

Scary stuff

This is absolutely mind-boggling

In the annals of a nation that has prided itself on keeping tabs on government debt since shortly after the Glorious Revolution in 1688, the state has never needed to borrow as much money. According to the Ernst & Young Item club, in the two years 2009-10 and 2010-11, the government will probably have to raise £350bn.

That is more debt bequeathed to its successor than the total borrowed by successive rulers and governments of Britain between 1691 and 1997, the year Labour was elected.

The prime reason that Britain’s finances are so utterly banjaxed is the precipitous collapse in tax revenues from the financial sector.  That, coupled with Brown’s belief that what is needed to repair the situation is ever greater injections of liquidity into the system, is going to cripple the economy for a generation.  And I’m not sure that Brown will be able to keep things going as they are – that is without substantial cuts in public spending, or tax rises, or interest rate rises – for another year and a bit.  We’re either going to see a sea-change in economic policy or, as I think is more and more likely, an election.

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