The ONS did not deliver the Chancellor a Happy New Year this morning, as the headlines from today’s public finance figures show how difficult the Government is finding it to get borrowing under control. Public sector net borrowing was £15.4 billion in December 2012, higher than December 2011’s £14.8 billion. Total current expenditure is up 5.4% on the same month last year, including net social benefit spending up 3.3% and ‘other’ non-interest spending up 6.5%! Whatever happened to austerity?
In the longer term context, so far this financial year:
- Current spending for April-December 2012/13 has been 2.7% higher than the same period in 2011/12 – the OBR is forecasting this figure will be 2.5% higher for the whole year.
- Current receipts for April-December 2012/13 have been just 0.3% higher than the same period in 2011/12 – the OBR is forecasting this figure will be 1.2% higher for the whole year.
But amongst this monthly gloom, arguably the most depressing statistic is this: since 15th September 2008 (the day Lehman Brothers’ collapsed), the UK’s public sector net debt has DOUBLED. In fact, it has TREBLED since 2003/04. Today’s figures for the end of December 2012 put our net debt at £1111.4 billion, almost exactly double the £556.8 billion figure for the mid-point between the end of August 2008 and September 2008 (Lehman’s collapsed on September 15th). Yes, we might see a fall next month due to monthly variation, but the picture is clear: our debt is still rocketing.
Of course, in GDP terms the jump is not quite as severe. In those terms, the debt burden has “only” doubled since 2007/08! And that’s if we ignore all the quite important off-balance sheet stuff and contingent liabilities. Not to mention the worrying fact that all the talk of government spending cuts means only between 6 and 10% of the public are actually aware that debt continues to sky-rocket.
The simple fact is, the longer we put off attempts to balance the books, or fail to do whatever possible on the supply-side to raise our underlying growth rate, this debt is going to continue to accumulate. It will all have to be inflated away, repaid or defaulted on at some stage. And let’s face facts: it will be future working populations who will pick up the tab.