Mind the Gap

In his diary today, John Redwood broke down the components of the hugely disappointing balance of payments figures totalling 5.2% of GDP for last year:

• Over 1/4 of the deficit is because of payments to the EU and overseas aid.  These will go on rising because they are ratcheted to growth
• Then there is the money we are paying foreigners who own UK assets - this will also go on rising
• Finally there is the gap in trade - in surplus to the rest of the world but massively in deficit to the EU

The record deficit has provoked a rash of Brexit scare stories.  The Governor of the Bank of England says that we now rely on the "kindness of strangers" as foreign investors bridge the current account gap.  George Osborne invokes project fear - "today's figures expose the real danger of economic uncertainty and shows that now is precisely not the time to put our economic security at risk by leaving the EU." 

When I was a young Royal Air Force Pilot, struggling to contain my monthly mess bill within my monthly salary, I was reliant upon the" kindness" of Cox's & Kings Bank (6 Pall Mall SW1) to keep me afloat.  When it became apparent that their patience was wearing thin, I was obliged to trim my expenditure and seek more moderate company in the Mess.  I just wonder whether there might not be a parallel with George's stewardship of the economy?  He has certainly spent profligately, doubling the National Debt whilst in office.  And when a bit of good fortune came his way, instead of saving and insuring against the next financial shock, he dispensed it like free beer at Happy Hour.

Rather than trying to scare us by saying that if we leave the EU we may not be able to borrow on such benevolent terms, perhaps the real answer is to borrow less, get the public finances in order and become solvent?