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David Cameron Warns Spending Could Lead To Britain Defaulting On Its Debt

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http://www.guardian.co.uk/politics/2009/au...government-debt

David Cameron today raised the stakes in the pre-election battle over government borrowing when he warned that Gordon Brown's anti-recessionary spending could lead to Britain defaulting on its debt.

In remarks seized upon by Labour as evidence of political naivety, the opposition leader branded Labour's plans to more than double the national debt to £1.4tn in the next five years as a "disgrace" that could lead to a boycott of the UK by overseas investors.

Cameron said: "You can get to a level of government debt where, not that it becomes certain that people will cease to lend you the money, but you start running risks of them demanding higher premia, higher interest rates. Or you run the risk of not being able to meet your obligations."

Cameron was careful to qualify his remarks after Labour accused him earlier this year of talking down Britain when he warned that Brown could be the second Labour prime minister forced to apply to the IMF for a loan.

"I have never predicted that is going to happen," he said of his warning that Britain could default. "But as government borrowing goes up and up and up, you start running that risk. You should not be running that risk ... I'm not saying it's going to happen, but the government, with the levels of indebtedness they have, they are running those risks."

But last night an aide to Alistair Darling said: "It was an extraordinarily stupid thing to say which betrays his inexperience and opportunism. Rather than scaremongering, David Cameron should explain why he thinks it is right to undermine prospects of recovery by cutting spending now."

John McFall, Labour chairman of the Commons Treasury select committee, also condemned Cameron: "This is economic policy by innuendo. It serves no one, not least the government and not himself as an aspirant to government, to frame the economic debate in such loose language. He knows himself that this is a global problem." The row broke out after Cameron highlighted the government's record level of borrowing and accused the government of taking unnecessary risks with borrowing and debt levels.

Darling estimated in the budget that Britain would need to borrow £175bn to balance the books this year - almost 12% of GDP and a record for peacetime. The government has allowed borrowing to rise rapidly from £35bn two years ago in an attempt to mitigate the impact of the most severe global downturn since the Great Depression.

No Darling what is an incredible stupid thing to do is spend money you don't have with no plan to pay it back.

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How long is Britain going to put up with these nauseating criminals?

Quite. Camermoron must be stopped. His Agenda is to destroy Britain so that his Bullingdon club mates can make a fortune and hold power for a generation. Shut him up someone, before he does real dmage.

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Quite. Camermoron must be stopped. His Agenda is to destroy Britain so that his Bullingdon club mates can make a fortune and hold power for a generation. Shut him up someone, before he does real dmage.

Ah, ustood, Darling & Brown haven't damaged anything, let the boys work :lol:

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Quite. Camermoron must be stopped. His Agenda is to destroy Britain so that his Bullingdon club mates can make a fortune and hold power for a generation. Shut him up someone, before he does real dmage.

the real damage has already been done by labour. browns the moron who plans to leave us £1.4trn in debt

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Quite. Camermoron must be stopped. His Agenda is to destroy Britain so that his Bullingdon club mates can make a fortune and hold power for a generation. Shut him up someone, before he does real dmage.

What damage has he done? From what I can see the Labour party are in power and they have run the country to the point of having too much debt.

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How long is Britain going to put up with these nauseating criminals?

In the Guardian article, I was most interested to note the opinion of senior Labour politicians towards Telab. I can understand taking a pop at Hannan over his (somewhat extreme) views about the NHS... but trying to discredit Cameron for talking to Taleb seems a dangerous ploy. Sure, Taleb might seem a little eccentric in the public eye - but he speaks more sense than the vast majority of commentators. Perhaps, if the likes of McFall and Darling's posse had listened to the likes of Taleb they might not have been quite so blind-sided by events? Either way, it smacks of clear ad-hominem, which suggests (to me) that our government don't have much grasp on the facts.

Edited by A.steve

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Gordon Brown is operating a scorched-earth policy and in his hate-filled, deranged mind, is calculating that the Tories get the blame when they come in next year and have to administer strong medicine in an attempt to clear up his mess.

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Gordon Brown is operating a scorched-earth policy and in his hate-filled, deranged mind, is calculating that the Tories get the blame when they come in next year and have to administer strong medicine in an attempt to clear up his mess.

That seems to be his strategy. I wonder what will happen if by some miracle he gets reelected. :ph34r: Just how delusional will he become then?

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Sure, Taleb might seem a little eccentric in the public eye - but he speaks more sense than the vast majority of commentators.

I bet Cameron didn't want to know him three years ago when the Tories were lauding the city for their success. That's what annoys me most about them.

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That seems to be his strategy. I wonder what will happen if by some miracle he gets reelected. :ph34r: Just how delusional will he become then?

I think that Brown still harbours the hope that he will stop the Tories getting an overall majority. But just watch the pound and the gilts market topple if there becomes any real possibility of that happening. The only thing that is sustaining those markets is the belief that the Tories are heading for a landslide and that Brown will be turfed out on his fat @rse within 12 months.

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There's always printy printy...

The [bOE] continues to shock mkts with news that it was really a choice between a GBP50 bln or GBP75 bln QE add at its Aug meeting clearly signalling that there is a decent risk of more to come when the current buyback prog runs its course in Nov. The fact that King sided with the GBP 75 bln camp adds more weight to this view and will once again leave markets scratching their heads as to whether the CB knows something that isn't in the public arena that is prompting them to follow such an aggressively expansionary path. Indeed the bulk of recent UK econ news has been positive and with infl overshooting mkt estimates this latest surprise could prove tricky for mkts to stomach.

Oops this would have been better in the Gilts thread.

Edited by Kilham

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It seems to me that there are a whole raft of things that demonstrably need to be said that for political reasons can not be said. The level of government debt is an obvious one. It is beyond any reasonable doubt that UK plc is borrowing too much money, why should it be even contentious to point out the obvious danger in this?

Similarly it is now beyond the pale to even want to discuss the foundations of the state put in place 64 years ago i.e. the welfare state and the NHS, as if what was right then, must be right now. As Hannan found out last week any criticism of the NHS is considered an extremist point of view.

Even debates like continuing universal child benefit - irrespective of need or income or number of children in a familly is considered too hot a subject for the politicians to debate. Any politician who questioned why we are paying benefits to six million people of working age would not keep his job for another day.

Only 3 FTSE 100 companies can afford to offer final salary pension schemes to new joiners, so isn't it odd that the taxpayer can afford to put the entire public sector on one?

Trouble is, that the numbers are such that sooner or later we as a country are going to have to really consider whether we can to afford to continue as we are for example by 2013 we will be spending more on interest payments than on defence.

Any rational analysis leads to the conclusion that we can not continue as we are and that when change comes it will be a complete restructure not a tinker, the only question is when and who implements it.

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^^^^^^^^

Good post Mr Prudence.

The old fingers in your ear, bury your head in the sand kind of politics that is the scourge of modern Britain. The quest for power rather than integrity and doing what is right.

I really don't know what the answer is: the truth will hurt, but in time the unspoken truth will hurt more.

The political practice of kicking things into the long grass makes it someone else's problem.

Government serves itself rather than its people.

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It seems to me that there are a whole raft of things that demonstrably need to be said that for political reasons can not be said. The level of government debt is an obvious one. It is beyond any reasonable doubt that UK plc is borrowing too much money, why should it be even contentious to point out the obvious danger in this?

Similarly it is now beyond the pale to even want to discuss the foundations of the state put in place 64 years ago i.e. the welfare state and the NHS, as if what was right then, must be right now. As Hannan found out last week any criticism of the NHS is considered an extremist point of view.

Even debates like continuing universal child benefit - irrespective of need or income or number of children in a familly is considered too hot a subject for the politicians to debate. Any politician who questioned why we are paying benefits to six million people of working age would not keep his job for another day.

Only 3 FTSE 100 companies can afford to offer final salary pension schemes to new joiners, so isn't it odd that the taxpayer can afford to put the entire public sector on one?

Trouble is, that the numbers are such that sooner or later we as a country are going to have to really consider whether we can to afford to continue as we are for example by 2013 we will be spending more on interest payments than on defence.

Any rational analysis leads to the conclusion that we can not continue as we are and that when change comes it will be a complete restructure not a tinker, the only question is when and who implements it.

Spot on.

I'll just add there is no political will or structure for this sort of radical change - so we have to collapse first, so that people get it in their thick heads.

Like any sort of addict, hitting bottom is usually the first stage.

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