{"id":1327,"date":"2016-04-07T16:00:35","date_gmt":"2016-04-07T16:00:35","guid":{"rendered":"http:\/\/scotsindependent.scot\/?p=1327"},"modified":"2016-04-05T20:18:21","modified_gmt":"2016-04-05T20:18:21","slug":"so-just-how-much-of-an-economic-basket-case-is-the-uk","status":"publish","type":"post","link":"https:\/\/scotsindependent.scot\/?p=1327","title":{"rendered":"So just how much of an economic basket case is the UK?"},"content":{"rendered":"

Debt. It\u2019s been a fairly topical subject in recent weeks. With The Hootsmon, revealing on March 10 that Scotland currently would have a \u201cblack hole of \u00a315 billion\u201d. And\u00a0 on March 24 revealed that it would have been only \u00a310 billion on March 24 if we had voted YES instead of NO on Black Thursday!
\n\"scotsman\"<\/a>So, that means according to the voice of Unionism, that Scotland has lost another \u00a35 billion (\u00a35,000,000,000) by staying with the \u201cdelights\u201d of London\u2019s Tory austerity agenda in just 18 months.<\/p>\n

But, debt, real or imagined, has been on my mind for another reason as well!<\/p>\n

I had a conversation recently with one of the unionist Councillors here in Falkirk, yes on rare occasions we can have civil conversations. We were chatting about the GERS figures. Now to be fair this is not the brightest tool in the political box by their own admission and he was accepting the press interpretation that Scotland could not afford Independence with a \u00a315 billion black hole.<\/p>\n

When I asked how much he thought the UK \u201cblack hole\u201d was, I received a blank look. The idea that the UK was seriously in hock had never entered the thought process. To be fair not much does.<\/p>\n

Being in a generous mood I advised that the UK debt had been approx. \u00a3700 billion when the Tories came to power. At the time of Black Thursday, it had rocketed to approx. \u00a31.4 trillion and now stood at approx. \u00a31.7 trillion.<\/p>\n

I also pointed out that the YES campaign offer was to take approx. \u00a3140 billion as Scotland\u2019s share of the UK \u201cNational Debt\u201d had we been using Sterling as a common currency.<\/p>\n

By placing Scotland\u2019s balance sheet alongside that of the UK I had rocked my colleague in a way he had never expected. That in turn got me thinking about the need to take on this whole issue. By exposing the frailty of the UK economy and the frightening scale of the UK debt burden we can perhaps unsettle some of the unthinking complacency which relies on the idea of the UK being an economic rock on which Scotland relies.<\/p>\n

The simple truth is that the UK is an economic basket case. Their only real prospect of dealing with debt at those levels is through pretty high inflation rates. However, we have a Tory Government which cannot even manage to get inflation rising far less anything else in the economy!<\/p>\n

So just how much of an economic basket case is the UK?<\/strong><\/p>\n

The UK \u201cNational Debt\u201d is calculated as the total amount of money the British Government owes to the private sector and other purchasers of UK gilts.<\/p>\n

In Dec 2015, Public sector net debt (ex. public sector banks) was\u00a0\u00a31,542.6 billion<\/strong>, equivalent to 81% of GDP. <\/strong>Source: [1. ONS public sector finances <\/a>] (page updated Jan 22nd 2016<\/em>) Note the caveat they put on excluding public sector banks!<\/p>\n

Other note is that a thousand billion is generally referred to as a trillion.<\/p>\n

\"graph\"<\/a><\/p>\n

Budget deficit \u2013 annual borrowing<\/strong><\/p>\n

This is the amount the government has to borrow per year.<\/p>\n

In 2013\/14 net borrowing was forecast at \u00a398.5bn or 5.7%<\/strong> of GDP (excluding public banks).<\/p>\n

In 2014-15 net borrowing was forecast at \u00a388 billion<\/strong> (4.9%<\/strong> of GDP).<\/p>\n

The forecast for 2015-16 is net borrowing of \u00a369.5bn or 3.7%.<\/strong><\/p>\n

So how can the deficit go down as the Tories claim but the debt mountain rises?<\/strong><\/p>\n

If annual borrowing falls from \u00a398.5bn to \u00a369.5bn, the annual deficit is lower. At the same time, the UK National Debt, (total debt), is still rising. In this case by 98.5 + 88.0 + 69.5 = \u00a3256 billion over those three years.<\/p>\n

Unionism is simply unable to admit just how much of a Black Hole successive Governments have made. It\u2019s much easier to blame the EU, or the \u201cworld recession\u201d or laugh at the idea of trying to balance the books.<\/p>\n

We could not expect George Osborne to do what John Swinney has to do each year. Come to think of it even every Council has to present a \u201cBalanced Budget\u201d each year by law. The sole exception is the mother of Parliaments, and how she has made the rest of us pay for that profligacy.<\/p>\n

Perhaps the most useful measure of national debt is to look at it as a % of GDP.<\/p>\n

\"graph2]\"<\/a><\/p>\n

After a period of financial restraint, from mid 1990s, public sector debt as a % of GDP fell to 29% of GDP by 2002.<\/p>\n