Posted by: aboutalbion | September 28, 2012

National debt

This is the political party conference season in the UK.  All parties are beginning to stake out positions for the next general election which is expected in May 2015.

In relation to the UK national debt, all the main parties use phrases, such as “we wish to deal with the debt problem”, to suggest that they have a UK national debt policy.  I listen as carefully as I can for what that may be.

For me, the national debt is a moral issue.  From where I sit, a peace-time government has a moral responsibility not to spend more than it collects.  Why?  (1) Because debt curtails freedom.  The freedom of choice of a debtor is curtailed by needing the consent of creditors in order to exercise that freedom of choice.  That consent, though often given, can also be withdrawn.  (2) Because debt ignored is a curse on our children and their freedom of choice.  My generation was cursed with an increasing inheritance of national debt.  The debt mountain doesn’t have to go on growing.  The UK is not too big to become a failed bankrupt state …

For myself, I would like to see a non-partisan agreement within the political class to adopt a policy to pay off the UK national debt within 25 to 50 years.  But I don’t know how it can come about, because there is little evidence that the electorate would vote for the necessary policies of continuous self-restraint.

I find that there is an absence of morality in political manifestos that invite support for lowering taxes, because there is an unspoken corollary that revenue shortfalls can be made up from increasing the amount of national debt.

These are some approximate figures for the UK national debt.  It seems that the current debt is around £1 trillion, that the current interest paid on this debt is around £43 billion, and that the current GDP of the UK is around £1.5 trillion.  And there is a current budget deficit, which is increasing the national debt all the time.

So what are the main political parties saying the UK national debt?

The Lib Dems have just finished their conference.  In a keynote speech, their leader foresaw that some countries that did not get their own house in order would lose control of their finances, would be subject to new rules imposed by their creditors (without warning or clemency), and would find their right to self-determination withdrawn by the markets.

He suggested that other countries (that did get own house in order) would keep control of their finances, would continue to write their own budgets, and would set their own priorities and shape their own futures.

I find that this kind of rhetoric about ‘getting our own house in order’ no substitute for a UK national debt policy.

I shall keep an ear open in the coming days for reports from the Labour and Conservative party conferences.

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