Wednesday, June 09, 2010

OK, the Budget Deficit is a problem; but so is the Cleggeron solution

I showed here that UK National Debt is at the low end of comparable states, but that we do not do so well on Current Account Balance.  Today I had a look at comparable Budget Deficit figures, which are the product of public spending minus public revenue. BD is the annual cost, (assuming it is negative), and each year feeds in to the National Debt.

This does not look good for us.

Budget Deficit as % of GDP
Greece                  13.7
UK                        12
Portugal                  9.3
Spain                      8.1
Italy                        5.3
Germany                 4
France                    2.7
USA                       1.5

So while our National Debt is at the moment reasonable compared to other economies, it is set to rise by our budget deficit, and also by a PFI and pension bill in coming years, will push our National Debt up to join the others.

We do need to get  the Budget deficit down But it should be done in an orderly, long term way, not in an all-fired hurry; the way the GonDems are going about it, hacking away at services to the poor, is wrong. They should first slash the big budgets, on Trident &c.

I have shown here the potential savings:

Trident                            96
Eurofighter                      15
Aircraft carriers                 5
ID cards                         30
NHS computerisation     30
Other computerisation    30 (estimated)
Road building                  7

Total                         £213 billions

That is only about 1.3 years of deficit, but it's a start. Further down on the same page, there are a further set of revenue savings to be made:
Item                             £ billions

Interest saved on Trident &c   10
Tax evasion                            23
Aviation tax                            10
High Income Tax                    10 (est.)
TNC tax                                 20 (est.)
Pull out of Afghanistan              6 
Total                                      79 billions a year.

This is the right approach to the deficit.  Go for the big, low hanging fruit first. But the ConDems will go for the poor, and throw public sector workers on the dole. The threat of bringing on a second recession is not just Labour politicking, it is real.

We need to prepare ourselves for a second recession, and even a worldwide economic collapse of confidence. 

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