Britain is one of the best prepared countries in the world for the next economic crash, boasts George Osborne. Really? On his watch, our national debt has nearly doubled, our current account deficit has broken records, and our public books still aren't balanced. The sun is about to stop shining, but the Chancellor has left a gaping hole in the roof.
Osborne's version of austerity is all talk. Over the last decade, Britain hasn't just had monetary stimulus, but fiscal stimulus too. Remember: he broke his promise to close the deficit by 2015. Every year, the Government has spent tens of billions more than it took in taxes. If that's not fiscal stimulus, what is?
For the last few years, the Chancellor has been able to hide behind economic growth. But the recovery has been an unsustainable illusion, based on cheap credit and Government largesse. Just like his 1970s predecessor Anthony Barber, Osborne's borrow-and-spend strategy has stoked a temporary boom. As Barber found out, it will all come crashing down.
The problem with borrowing is that at some point you have to pay it back - with interest. Despite record low interest rates, Britain's annual debt interest payments (currently £47 billion) exceed the departmental budgets for the Home Office, the Foreign Office, Justice, Transport, BIS, and DEFRA combined. The minor cuts Osborne has made have only funded higher pay-outs to the State's creditors.
Osborne can't escape the blame for Britain's next bust. He put off balancing the books till tomorrow. For a real recovery, we need to face up to our economic problems today.
"A revolutionary text ... right up there with the Communist manifesto" - Dominic Lawson, Sunday Times
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