I have spotted a worrying trend amongst politicians and the media, concerning the size of government, the, frankly, colossal budget deficit and the levels of public debt.
The narrative—reinforced by Brown's £16 billion sell-off of assets (which aims to raise, over three years, slightly less than the government borrowed in August)—seems to be that the current talk of cost-cutting is merely a temporary measure caused by the global downturn.
The UK state's liabilities amount, as Burning Our Money outlines, amount to some £7–£8 trillion—a colossal figure, to be sure, but much of it is in the form of unfunded pensions and other future liabilities.
More importantly, the deficit in terms of current spending is running at nearly £200 billion per annum. It is simply not sustainable for the state to spend £200 billion more than it earns in any year, let alone consistently.
Which brings me back to my original point: the theme in the media and in policial circles seems to be that this level of debt is not sustainable in these dire times. That is true enough but it is not this that worries me.
What worries me is the continuing fantasy that this level of spending is only not sustainable because of these dire times. There are many—most notably the NuLabour government—who seem to believe that, once the UK economy is back on track, the splurge can continue.
Additionally, the other variant that I am getting is—if we could only pay down the debt and get the UK's books back in the black for just one year—that we could carry on as before.
Let me make this absolutely clear: the UK state cannot carry on spending at current levels—even were we in a boom, it would be a fucking stupid thing to do.
Let us leave aside my personal philosophy for the moment and acknowledge that, for purely economic reasons, the state is going to have to shrink.
And that shrinkage is going to have to be permanent—this country can no longer continue with the social democratic spending programme because this country cannot pay for it.
So, the debate is no longer about whether we shrink the size of the state: the debate much now focus on how we are to manage the transition.*
Because the British government cannot afford to carry on indefinitely spending £200 billion a year more than it earns. And that means a really radical cutting of the funding and services that many people might be used to—and a lot of people are going to lose their jobs.
Your humble Devil predicts that even if the British economy shows positive growth in the next quarter, the pain for many is very far from over.
UPDATE: to amplify, the Tories seem to be struggling to find more than about £20 billion to cut. They need to be thinking about ten times that number.
* Those of you who heard my presentation at the Libertarian Alliance Conference may well recall that this is a favourite theme of mine.
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