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If this team were running a company, they'd be out
Christopher Fildes25 Nov 2008
That imprudent Scot, Alistair Darling, now borrows one and a half billion pounds every week. From April, he will step this up to £2billion a week and beyond - but, of course, he will not owe the money. We shall. It is something to add to the mortgage.
Any ideas about paying it off? Don't be silly. On his own projections, the best we can hope is to get back to acceptable levels of borrowing halfway through the next decade - but who can say what will have happened by then? We may be at war with the Isle of Man.
Along the way, we shall be reminded that when a Chancellor borrows, that is not an alternative to raising money from taxes. It merely postpones them - and the longer the postponement lasts, the more they need to bring in. Some of these post-dated cheques on the taxpayer were written into his statement. The last Chancellor to try this was Norman Lamont, a busy borrower who announced that taxes would go up in his next budget. When that time came, he wasn't there, and not all his cheques got through.
Darling's debacle could be seen a long way off. Gordon Brown, was the biggest spender in our history, and he always got the sum wrong. In budget after budget, he would announce his borrowing for the year ahead, and murmur that last year's figure was an under-estimate. Eight months ago, Darling came out with a figure that will be less than half what he needs.
Imagine that they were running, not a country, but a company. In the good times they had borrowed more than they planned, and now that the bad times were here, they wanted to borrow their way out of trouble. What would they be told? "We shall need to see a less profligate business plan, and a new finance director. And we notice that your previous finance director stepped up to become chief executive - so we shall want him out, too."
One other way out of trouble, open to countries but not to companies, is to wear away the debt's real value. Inflation is the name for that. This worked under the last of the Old Labour governments, when inflation reached 26.9 per cent. Today's fashionable worry is deflation, but fashions change, under pressure, and credit erodes. The sort of money that Darling now reckons to borrow cannot be had for the asking.
So much for the proceeds of growth, which the Tories looked forward to sharing. What growth? What proceeds? They would have done better to stick to first principles, and to say that until the public finances were put in order, nothing else would go right. On Budget day, year after year, I said as much, and yearned for a Chancellor who would act on it. King Solomon knew better: hope deferred, he said, maketh the heart sick.
Reader views (5)
I am sick of hearing how the budget killed the golden goose and that everything flies in the face of monetary prudence that should have been observed. Lets not forget that Britain still enjoyed the lowest inflation figures to the rest of Europe and a healthy employment until now. How come we have not pointed out that it was the so-called capitalistic 'prudence' of letting the rich get richer and bankers fatten their wallet that drove us to the wall in the first place. Yes, we all have our respective places in society and within the economy, but will someone point out how we still fawned over the lavish champaigne lunches that the City regularly enjoyed. How keynesian it must have been. By the way has anyone seen my local forex trader anywhere? He must be betting on the sterling in the futures market along the lines of what he did with energy stocks like oil and gas. That's the golden goose that the chancellor is accused of strangling in its gilded cage.
- Robin Sengupta, Essex, UK, 25/11/2008 16:53
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Apologies from Scotland. However please note lots of people in Edinburgh think our city has never recovered from the time Darling was on the council here. Also we think he's a carpet bagger, seeing he was born in London!
- Mark, Edinburgh, 25/11/2008 14:23
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Tonyb ... I think they already did, except they call it expenses and the John Lewis list etc.
- John, London, 25/11/2008 13:50
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Isnt this just another way of saying that the country is bankrupt?
UK plc RIP
- Whitenoiz, Andalucia, Spain, 25/11/2008 13:13
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If this team were running a bank ... they'd have trousered tens of millions in bonuses last year ...
- Tonyb, Melbourne, Australia, 25/11/2008 10:34
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