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Posts Tagged ‘gdp’

Heavens, we’re in a lot of debt

Monday, March 8th, 2010

Or are we?

I read this article today, arguing that the constant headlines of “largest ever deficit” in the UK are alarmist and that it’s pretty abysmal that both main political parties aim to cut public spending in order to cut the national debt, when there are strong arguments to not do so. There’s a recession on, you know!

Which got me thinking about whether the national debt really is all that big. Of course it’s a big round figure (I’d type it out but am scared my ’0′ key will break through overuse) but equally our earnings, and therefore the government’s tax revenues, are much greater than most periods in history too. What really matters is the ratio of debt to how much money is in the country, surely. So I found this graph:

UK national debt vs GPD graph

Another graph on the same page demonstrates that current national debt is at around 60% of GDP, which I don’t think is too bad given that the ongoing global economic crisis is considered to be at around the same order of magnitude as the 1930s great depression, and back then national debt hovered between 150 – 200%. I know we live in a very different, more competitive world, but I doubt it’s anywhere near as catastrophic as the papers and the politicians would have us believe.

And another thing, I grew up in a northern town with mines, steelworks and baths that don’t take half an hour to pronounce, so naturally I hated Thatcher. But then the rhetoric of the past 10 years – that she may have been harsh, but by God she prepared us for the harsh, competitive world to come – has, if not softened, at least confused that view a little. But I recently came to the realisation that she was one of the chief instigators of this new harsh world. Claiming she’s alright because she prepared us for it is like saying the guy who pushed you in front of the train is alright really because he gave you a mattress to hide behind.