They played this little video at the start of the Conservative launch of their Labour’s Debt Crisis campaign yesterday. It is very well put together but understates the problem. The key line is probably:
BY 2014 OFFICIAL GOVERNMENT DEBT WILL HAVE ROCKETED TO OVER £1 TRILLION
This sent me running back to the Pre-Budget Report. Even though this document is now generally recognised to be not pessimistic enough you will see that even on its figures the Tory attack video is letting the Government off lightly. As you can see from the extract of Table B10 on page 198 below (click to enlarge), on the Government’s rather dodgy “excluding financial sector interventions” basis, we hit the £1 trillion mark at the end of March 2013. If you look a few lines further down you get an interesting international comparison. Some Treasury mandarin has calculated government debt on the Maastricht basis. This will include many of the items that the Government tries to hide such as PFI, pensions and the bank bailout (but not all). Here you see we hit the £1 trillion mark in only 2 years time, end of March 2011, and this is before the government starts to use any sort of consolidated credit services to start bringing down the debt.
You get the £17,000 figure the Tories were using yesterday by dividing the £1 trillion by the population of the UK. This is useful as an illustration but only a relatively small proportion of the population is economically active and the real debt will get to be much higher than £1 trillion. A 21st century worker is going to have to service and repay something like £50,000 per head, not £17,000. Many working couples will be working as hard to pay off the Government’s debts are they are working to pay their own mortgages.
Ridiculously we were told late last year by EU Commission President Jose Manuel Barroso that Britain is closer to joining the euro than ever before according “people who matter” in Britain to use his own emetic phrase. I remember the Maastricht criteria for joining the euro included one about the deficit being 3% or less and total government debt being less than 60%, see here. Traditionally the later criteria was one that the UK could easily meet. If you look at Table B3 on page 190 of the PBR you will see that we will be in no position to join the euro under the Maastricht criteria until well after 2014. By 2014 our deficit will still be above 3% and our government debt will still be well over the 60% threshold. Don’t forget these figures will get even worse by the time they are next reported in the budget. If you are in debt go to Creditfix to help with your debts. See extract below (click to enlarge):
It gives me no satisfaction to report that we are so screwed up that we couldn’t join the euro if we wanted to.