The latest data on the UK’s public finances have provided more ammunition for those arguing that the government cannot afford to cut taxes. However, the economic reality is far more nuanced – especially when it comes to debt interest payments. The bad news is that the government borrowed another £14.0 billion in May, £3.7bn more … Continue reading Is the Treasury ‘crying wolf’ over the debt interest bill?
Few people outside the Treasury think that now is a good time even to be talking about raising taxes, let alone actually doing so. Nonetheless, it seems almost certain that the Chancellor will start down this road in Wednesday’s Budget. This may not be as mad as it sounds. The arguments against immediate tax hikes … Continue reading Is there any case for tax increases now?
I’ve read some utter tosh on the state of the UK public finances in the last few days. Here is an attempt to correct some of the biggest misunderstandings. Most importantly, government debt does not have to be ‘repaid’, only serviced. As long as the government can meet the interest payments (I’ll come back to … Continue reading How I Learned to Stop Worrying and Love the Debt
The media has been dominated this week by scary headlines about the ‘mother of all recessions’, ballooning government borrowing, and the prospect of renewed ‘austerity', whether in the form of public spending cuts or punishing tax increases. As usual, a sense of context and perspective is sorely needed. Let’s deal first with the numbers released … Continue reading No need for ‘austerity’ – as long as lockdown doesn’t last much longer