Friday, Mar 05, 2010
Get out of that, without moving
The Telegraph: A claim of patriotism is the last refuge of a busted government
Britain’s budget deficit, as a percentage of GDP, is the worst in the G20, with total debt expected to go beyond £1 trillion and reach 100 per cent of GDP. Call it redinkonomics. This, in part, explains why Britain must pay much more to borrow than rival economies such as Germany, France and the US.
Posted by devo @ 06:41 AM (1246 views) Add Comment
16 Comments
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1. flashman said...
The author could save himself a lot of ink, if he just said: "Vote Tory"
It's a shame that these people feel that they have to twist and lie to boost the Tory party. It makes me wonder if there are actually any legitimate reasons to vote for them?
2. Grizzly Bear said...
This is getting old real fast, the economic sentiment is against, the sitting party, Labour. Please go, Brown Bottom and Nu Labour, already! It's shabby, hanging on to the bitter end!
3. hpwatcher said...
It's a shame that these people feel that they have to twist and lie to boost the Tory party. It makes me wonder if there are actually any legitimate reasons to vote for them?
Even with all that, I prefer them to Labour who have lied just as much - and even gone to war over lies.
4. rumble said...
I have no interest in either of above, but anyone who votes labour after all that's gone on must be an incredibly slow learner.
5. mark wadsworth said...
You may remember those little calculations I do, showing that if the Co-op Bank offer 75% LTV mortgages @ 3.19% interest and 85% LTV mortgages at 4.49% interest, the marginal interest rate of that last 10% is 14.24%?
The same logic applies to countries. If e.g. total debt of 50% of GDP (say £750 billion) costs an interest rate of 4% the total interest bill is a tolerable £30 billion, but if total debt increases to 75% of GDP (say £1,125 billion) means the average interest rate goes up to 5% THEN the total interest bill goes up to £56.25 billion, THEREFORE the true interest cost on that last £375 billion is £26.25 billion = 7%, and it gets progressively worse from there.
So, once government debts go beyond a certain proportion of GDP, it is quite simply untrue to say that the government can borrow more cheaply that the private sector, which is yet another reason to be against it.
It's still no reason to vote Tory though, they don't have a clue either.
6. letthemfall said...
JR is one of the most partisan journalists on the Telegraph. Sometimes he's quite witty; the rest of the time he rants like this. That's the trouble with so much political journalism - it's right to vote for this or that party because it just is.
7. growler said...
What a paradox: If we want a really serious HPC we'd have to all vote Labour.
8. str 2007 said...
Mark
Interesting calcs and brings up something I mentioned in an earlier post when we were discussing cuntries debt levels.
£60 odd billion is an incredible amount to be paying in interest,
Roughly £1000 for every man woman and child in the country.
Do we know the total tax take figure ? I assume we must. This would include all taxes and VAT etc.
What are the interest charges on incurred debt as a percentage of total tax take ?
9. inbreda said...
@4 - "anyone who votes labour after all that's gone on must be an incredibly slow learner" - Very funny and very true
@7 - "What a paradox: If we want a really serious HPC we'd have to all vote Labour." - Very true. This is why I would vote for Labour. Plus the fact it would be funnier to watch them try to clean up their own mess rather than passing the buck to the Tories and claiming that they had exceptional growth and abolished boom and bust with hte exception of the global credit crunch which was out of their hands.
10. Icarus said...
Here's what a couple of randomly selected international debt/GDP comparison sites have to say:
General Government Gross Debt (% GDP) 2009 General Government Gross Debt (% GDP) for Canada in year 2009 is 78.185 %.
General Government Gross Debt (% GDP) for France in year 2009 is 76.675 %.
General Government Gross Debt (% GDP) for Germany in year 2009 is 78.692 %.
General Government Gross Debt (% GDP) for Italy in year 2009 is 115.795 %.
General Government Gross Debt (% GDP) for Japan in year 2009 is 218.601 %.
General Government Gross Debt (% GDP) for United Kingdom in year 2009 is 68.733 %.
General Government Gross Debt (% GDP) for United States in year 2009 is 84.767 %.
AND.....
1 Zimbabwe 304.30 %
2 Japan 192.10
3 Saint Kitts and Nevis 185.00
4 Lebanon 160.10
5 Jamaica 131.70
6 Singapore 117.60
7 Italy 115.20
8 Greece 108.10
9 Sudan 104.50
10 Iceland 100.60
11 Belgium 99.00
12 Nicaragua 87.00
13 Israel 83.90
14 Sri Lanka 82.90
15 Egypt 79.80
16 France 79.70
17 Germany 77.20
18 Portugal 75.20
19 Hungary 72.40
20 Canada 72.30
21 Jordan 69.90
22 United Kingdom 68.50
23 Austria 68.20
24 Ghana 67.50
25 Malta 66.20
11. mark wadsworth said...
STR, google "public sector finances databank" for all you need to know.
From memory, total tax take plus bits and pieces around £600 billion (that's £10,000 each) and total debt interest about £50 billion.
To be fair, two-thirds of that £50 billion is paid to domestic investors, probably mainly pension funds, so instead of your taxes going to pensioners directly via tax system, it goes indirectly via taxes and then interest payments to pensioners (including future pensioners).
12. icarus said...
OTOH, here's what a couple of randomly selected debt/GDP international comparisons sites have to say:
General Government Gross Debt (% GDP) 2009 General Government Gross Debt (% GDP) for Canada in year 2009 is 78.185 %.
General Government Gross Debt (% GDP) for France in year 2009 is 76.675 %.
General Government Gross Debt (% GDP) for Germany in year 2009 is 78.692 %.
General Government Gross Debt (% GDP) for Italy in year 2009 is 115.795 %.
General Government Gross Debt (% GDP) for Japan in year 2009 is 218.601 %.
General Government Gross Debt (% GDP) for United Kingdom in year 2009 is 68.733 %.
General Government Gross Debt (% GDP) for United States in year 2009 is 84.767 %.
AND.....
1 Zimbabwe 304.30 %
2 Japan 192.10
3 Saint Kitts and Nevis 185.00
4 Lebanon 160.10
5 Jamaica 131.70
6 Singapore 117.60
7 Italy 115.20
8 Greece 108.10
9 Sudan 104.50
10 Iceland 100.60
11 Belgium 99.00
12 Nicaragua 87.00
13 Israel 83.90
14 Sri Lanka 82.90
15 Egypt 79.80
16 France 79.70
17 Germany 77.20
18 Portugal 75.20
19 Hungary 72.40
20 Canada 72.30
21 Jordan 69.90
22 United Kingdom 68.50
23 Austria 68.20
24 Ghana 67.50
25 Malta 66.20
13. need-a-crash said...
@7. Good point.
Back at the 2005 election I knew Labour were the party most likely to wreck the economy and provide a HPC. Given we now know both Labour & Tory will only allow a HPC once we've well and truly run out of money... I guess Labour are most likely to get there first... so best vote Labour!
14. str 2007 said...
Mark
Whilst £50-60 billion in interest payments alarms me, that as a percentage of the overall take doesn't sound so bad. Well not country collapsing levels anyway.
Also the list Icarus posts makes us look quite noral and inline with other similar countries and economies.
In the last couple of days I'm starting to wonder what the big problem is or if indeed there really is one atall.
15. mark wadsworth said...
STR, quite right, we are a long way from "rioting and looting in the streets" territory, but we are still a long way from where we could be or should be. And just because the other countries are in a mess as well is not really an excuse.
16. icarus said...
Sorry to come in so late on this - but who's throwing around the £60bn debt interest number. Central government gross debt interest is about half that figure.