30 Apr 2015

Why does no-one challenge Cameron on the increase in UK Public Sector debt?

With one week to go before the Elections in the UK, I'm amazed that David Cameron can still get up and tell people that they have cut the deficit. As the figures from Eurostat show, in the five years that Cameron has been in power,  Public Sector Debt increased from £975 billion to over £1601 billion. That's an increase of over £625 billion. With a population of 64 million, that means that Cameron has effectively added around £10 000 of debt for every man, woman and child in the country. That's £40,000 for a family of four.

The following table shows how the amount of  UK public sector debt changed every year since 1995. 
As you can see, Blair's Labour government actually got debt levels to decrease from 1998 to 2001. Obviously, the financial crash in 2008-9 caused a huge in crease in debt levels. But frankly, can David Cameron really say that the increase of £105 billion between the end of 2013 and 2014 is evidence that they did a good job? Debt increases have been much higher under Cameron and Osborne than for any years except during the financial crisis itself.

So, how does he get away with it?  And why does nobody challenge him on this? Well, I suspect that he's got away with it because, so far, the interest rates paid when the UK government borrows are relatively low - currently about 1.59%. That still means that UK taxpayers paid over £49 billion last year on interest payments. But just imagine what would happen if those rates increased to, say, 3%. How could  a second Cameron government handle that given that, in addition, Cameron has said he will pass a law to prevent increases in taxation?  I can only assume that he would simply have to slash public services even more.

People of Britain, please can you note that there is only one party that has even mentioned the need to fix the insane system where commercial banks lend non-existent money to governments. It's the UK Green Party who have a commitment to reforming the Banking system. Indeed, they are proposing something pretty close to the ideas presented by Positive Money.  For me, it's the only way that there can ever be a real solution to the debt crisis that is plaguing the entire planet, and which has meant that Total World Debt has now soared to an incredible $199 trillion at the end of 2014 - a number 2.5 larger than the total global money supply.  If you don't fix the system, there is no way out.

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