Phew - An End to Austerity

Government borrowing now in surplus pronounced the trusted Kamal Ahmed on the BBC news last night, helpfully making the left-wing case and siren voices for “an end to austerity” and more spending by public bodies. No mention of the possibility of additional funding for defence, of course. Neither is it all good news because borrowing figures, by not considering Government liabilities, only tell a part of the whole financial situation. The BBC’s Micawber-like simplification conveniently overlooked the potentially crippling burden of, for example, hundreds of billions in future public service pension liabilities, the illusory treatment of student debt and PFI smoke and mirrors balance sheet treatment.  Otherwise, it is generally assumed that our National Debt amounts to a manageable 87% of our GDP, on which basis, people are happy to continue to lend us money to fund our lifestyle. However, as Philip Aldrick, writing in the Times, points out, once future liabilities are taken into account, the debt to GDP ratio almost doubles to 161%!  It’s the sort of fantasy accounting normally reserved for County Cricket Clubs.  A proper appraisal of the UK financial situation would look at both profit and loss and assets and liabilities. In this case, the bottom line would make salutary reading and support the, diminishing, band of voices who believe we should live within our means now and for the benefit of our successors.