The UK’s slow progress in bringing debt under control

Morning View
Morning View

The path to fiscal responsibility in the UK has been a tortuous one.

Britain’s debt ballooned during the financial crisis.

The fault was not entirely that of the then Labour government led by Gordon Brown. However, his heavy spending meant that there was little room for manoeuvre when the public finances took a beating.

The situation was such that even the Liberal Democrats, for all their distaste about austerity, acquiesced in an arduous programme of bringing debt levels back under control when the coalition government assumed power in 2010.

Progress has been slow, and yesterday’s Autumn Statement showed that it is set to get slower still.

The UK’s deficit has been gradually reduced, but remains high. It means that the UK’s overall debt level is rising (cutting the deficit merely means cutting the pace at which that debt pile is rising).

This is an alarming state of affairs. Young people are already struggling to match the lifestyle of their elders, without having to take on their national debts too.

In his statement to MPs, the Chancellor of the Exchequer confirmed that he was abandoning his predecessor George Osborne’s plan to achieve a budget surplus by 2020.

There is much talk about this being to the UK’s Brexit vote in June. But it will take many years to assess the impact of Britain’s decision to quit the EU, which in any event will not come into force for at least two years. There might be a short term economic hit followed by a long boom. No-one can know.

Mr Hammond is right however to focus on infrastructure spending. This is constructive expenditure, unlike the past excesses of the welfare state.

Business people here are right to call for our share of the infrastructure cash, of perhaps £250 million, to fund the York Street junction in Belfast so that it gets upgraded, as well as the A5 and A6 roads to the Northwest.