Much huffing and puffing surrounded last week’s budget with this blog’s prize for bare-faced effrontery going to Alasdair Darling for his cool rendition of the ever-popular “it-wisnae-me:—a-big-boy-did-it-and-ran-away” classic. Rather than rehearse the subtleties (or lack thereof) whether Ed has more Balls than Osbo when it comes to fiscal butchness, let’s discuss the much-quoted but seldom seen ‘bottom line’.
Political squabbling aside, objective observers frame this bottom line in purely fiscal terms: is UK plc broke? Loss of AAA rating suggests it might be but what do the numbers say? As companies are regarded as solvent not whether they have money but whether their credit is good enough to borrow more and hope times improve, let’s take the UK on that more elastic basis. A simple chart of public debt over a couple of decades is shown:
The years 1997 to 2005 were the first two sessions of Blair’s New Labour in which they seemed to hold the boat steady with around £350 bn in debt. But from then on—well before the banking fiasco hit—they seemed to lose the plot, such that by the time Labour had to hand the fiscal reins over to the Condem Coalition, debt had doubled to £650 bn and after three years, Osbo has demonstrated he’s powerless to stop it doubling again.
Nobody comes out of this well. Brown was still canoodling prudence when things started to drift; he and Darling were entirely too cosy with the FSA to clamp down on Canary Wharf’s junk financial wet dreams; neither Darling nor Osbo had the chutzpa to ream those bankers when their odious fiscal concoctions blew up in everyone’s face and nobody—including Balls— is copping to long-term inflationary poison a.k.a. ‘quantative easing’.
Worst of all, no-one has a solution. Both Darling and Balls are claiming they would have borrowed MORE (for feck’s sake) to pump into capital projects. Yet they insist their runaway welfare state is sacrosanct. But look at where all the money in that drunken-sailor free-fall shown above is going.
Most people think that Defence or Education are the big-spending departments of the UK government. That may once have been true. But while defence has fallen as a share (from 12% to 8%), look at how the great social programmes have mushroomed to take up close to 3/4 of all government spending. Top of all expenditure is public sector pensions costs that, by 2015, will have tripled in less than 20 years.
However hard-earned or desirable an index-linked public pension may be, the hard truth is that every person in the UK contributing £2,500 each year on top of similar amounts for health and welfare is a heavy burden for any economy. But when £126bn debt accumulates each year to sustain it and any prospect of that changing substantially in the future appears weak, then it is the economics of the madhouse.
The principal unionist argument appears to be that in these troubled times, Scotland should stick with big Britain to help it through. The simple truth, shown above, is that Britain is broke, living hopelessly beyond its means and desperate to keep Scotland as its oil and exports are two of the few good news stories. You want a generous welfare state? Six million Scots are few enough could build one on remaining North Sea oil, whereas sixty million British have most obviously failed to do so with the forty years so far.