The UK national net debt just keeps growing – and we're unlikely to ever see the debt pile decrease in any meaningful way.
According to the latest ONS data, the UK net national debt now stands at a massive £1.74 trillion, an eye watering amount of money by anyone’s standards (excepting the likes of the USA of course).
Now, just for those that are not aware of the difference, there are two main aspects to this. The ‘deficit’ and the net debt.
You will have heard many claims by the Tories that they are reducing the ‘deficit’ year on year and many people could be forgiven for thinking that means the overall debt is going down – but it doesn’t. In fact the reverse is true.
Apologies if I’m teaching some how to suck eggs, but I want to make sure everyone understands the difference between deficit and the net debt.
The deficit is how much we borrow in any single financial year from April to March.
It starts at zero and everything we borrow that year is added to the deficit – now, if we actually made money instead of borrowing then we’d have a surplus, but we haven’t been in that territory for decades.
Anyway, at the end of the financial year the accumulated annual deficit is then added to the overall national net debt and the deficit zeroed, so we can start a new year’s borrowing afresh.
This is what has been happening to the deficit for the last few years, which you can see on the graph above.
The first point to note is that the graph does not actually start at zero in April, because we borrowed money in April and this is a month by month graph.
Now, at the end of the financial year to March 2015 we had borrowed £91.4 billion. This was then taken off the deficit and added to the net national debt.
Then in the financial year to March 2016 we borrowed £73 billion, which was then removed from the deficit column and added to the net national debt. etc etc etc.
You can see that year on year the deficit is getting smaller, but it is still a deficit and will still increase the national debt.
So when the Tories say they are getting the deficit under control, it still means we’re borrowing heavily.
And so far this year we have borrowed another £37.7 billion.
Now let’s have a gander at the net national debt.
You can see how it’s been climbing since 1993, and bear in mind that we joined the European Union (as opposed to the common market) on the 1st November 1993 you can see what a boon our membership of it has been to the public purse of the UK – NOT!
The green bar to the right shows you where were as of the end of January 2018. With a couple of more months to go then you can see we’ll be well above last year’s figure.
What does this mean – it means that it’s a huge debt and there are always interest payments to be made on debt. At present our debt interest payments on this £1.7 trillion is about £1 billion … a week.
Or nearly one and a half times the amount we spend on defence!
And look around you and ask yourself what have we really go to show for for all that debt.
Now many would say that when we get the deficit down to zero we can then start working on generating a surplus and eat into this mountain of debt.
My view is that will never happen.
Because every incoming Labour government will always look to spend more on its socialist plans.
How many times have you heard a socialist say ‘we must borrow to spend to invest’ – when what they really mean is a splurge of free stuff – both nationally and internationally – to make people think how nice they are. Then they hope somehow that the nation’s debt will melt away while they win oodles of votes in the process.
Then there’s the socialist plans to tax the rich until the pips squeak so causing a flight of money and a run on the pound, meaning we have to borrow more.
Now, the Tories know this, so they will not want to lower the national debt by any amount that would give Labour the financial headroom to do any of this.
Also, the Tories know that any attempt to reduce the national debt will be portrayed by the left as baby killing austerity, leading to defeat at the ballot box.
I therefore believe that the Conservatives will keep the national net debt at a level that is sustainable and acceptable to their supporters.
So, unless there is a wide ranging public debate on this with the result that a clear message is sent by the country to parliament that huge levels of debt are unacceptable, all I can see is an ever burgeoning national debt together with ever increasing debt interest payments to keep it afloat.