Yesterday’s borrowing figures prove that borrowing to spend does not generate tax revenues, only interest bills.

Fiscal tightening hasn’t started yet (it will very soon with the VAT rise), so you can’t judge the success of fiscal retrenchment on yesterday’s figures.

If you think the borrowing figures are an indictment, then you are damning the borrow to spend policy.

The increased borrowing figures are the result of higher than expected spending “on health, defence and contributions to the EU” and a substantial increase in the cost of servicing debt. To argue from this that the best way of combatting it is to increase public spending is something of a logical leap to say the least.

Figures show we are spending too much – the best response would be to spend much more!

it’s not easy to interpret these figures.

for example, it’s possible that what lies behind these figures is an increase in public spending, not cuts, and hence the government has had to borrow more because it has been spending more, without that spending leading to rise in tax revenues. If that were true, we’d be looking at the inverse of the story you are telling here: a story in which you can’t cut the deficit by spending your way out of it.

now I’m not suggesting the above is true, just pointing out the possibility of projecting the story you prefer onto the data. Somebody could probably find data on whether government expenditure is higher or lower for Jul-Nov this year than last, but even that wouldn’t help much because it might be that cuts in one place (firing workers) has led to increase in expenditure in other places (welfare payments) although you have to believe in pretty high multipliers to think that firing somebody on say £20k leads to a £20k increase in welfare payments. *

Keynes was no fool, and no doubt meant that in practice efforts to cut deficits by cutting government spending will fail, but what he writes, taken literally, is obviously false as an abstract statement. If you reduce national income by £1 but cut spending by £1bn you can obviously balance budgets. The question is whether that theoretical possibility will occur in reality. And that’s to do with elasticities of demand, job creation rates and all manner of variables and relationships that we do not know. So when you write:

Cuts, at the pace Osborne is planning, suck demand out of the economy leading to lower growth, higher unemployment and hence lower tax revenues and higher welfare spending

you are making a forecast about uncertain relationships, not making a statement of fact. Of course everything you write may come to pass. But I’ve taken that bet with you that tax revenues will rise because I’ve a hunch that opposition to the government’s policies (an opposition which I share) has led to excessive pessimism about the economy, which I think has a habit of turning out a bit stronger than doomsayers say. So I don’t have a terribly sound basis for having bet against you, and I won’t be surprised if I lose.

To be clear, just because I think the government probably will manage to close the deficit by cutting, and tax revenues will increase, doesn’t mean that I support its policies, I think it is imposing unnecessary pain to do it, and doing some things that are counter productive even from a narrow deficit reduction p.o.v.

* I checked that pdf and for November 2010 Net social benefits 16.8 up from 16.1 in 2009 but Other current expenditure in 2010 was 32.6 up from 29.5 in 2009 – so it’s not obvious we’re looking at expenditure cuts in one place leading to increase social benefit payments. At least, not looking at this one month.

Given the choice between accepting that his polical ideology regarding financial matters simply does not work, versus maintaining faith and carrying on regardless and beggaring the country, I fully expect Osborne to do the latter.

Duncan, a brief look at the figures shows your article is completely wrong. Rhetoric, not analysis.

I’m all for attacking the government’s cuts, and for serious analysis of the possibility that the deficit will increase – or at least narrow much more slowly – as a result of poor economic growth.

But the figures clearly show this growth in the deficit is to do with increased spending on debt interest, heath, defence, etc. even despite an increase in taxes.

Please, editors, can we weed out this knee-jerk excuse for news analysis?

for example, it’s possible that what lies behind these figures is an increase in public spending, not cuts, and hence the government has had to borrow more because it has been spending more, without that spending leading to rise in tax revenues.

This is, in fact, what has happened. Revenues have grown by £1.2bn, but spending has risen by £5.3bn. £1.5bn of this is accounted for by an increase in the cost of servicing debt, the remainder, according to the ONS is made up by unexpected increases in health, defence and in contributions to the EU.

Yes Duncan, the borrowing figures yesterday were very worrying.

The complacency in the comments that follows your piece is characteristic of the Tory response.

There is little sign that economic activity will pick up any time soon. Added to that, we’ve just seen a sharp uptick in unemployment, a rate that will only continue because the coalition recklessly believes that an ailing private sector is on hand to hoover up these workers.

So spending is set to carry on rising, while revenues will be depressed by disappointing demand caused, as we know, by the very cuts that the coalition wrongly believes will close the deficit.

As Ireland shows us, no they won’t.

Next year we can just as much expect the deficit to stagnate nominally or even rise, than rely on the hopes – for that is all they are – of the Tories that it will fall just because the government sacks civil servants.

BenM said:

”So spending is set to carry on rising, while revenues will be depressed by disappointing demand caused, as we know, by the very cuts that the coalition wrongly believes will close the deficit.”

And demonstrated by saying it that he has no idea what he is talking about. Spending set to carry on rising because of cuts to, erm, spending.

For the benefit of BenM. The VAT rise is predicted to raise 14 billion next year. The interest bill is on course to increas by 15 billion in FY10/11. Just the increased interest bill for one year wiping out a big rise in VAT. The interest bill will of course get even bigger in subsequent years, but without VAT covering it.

That’s an illustration of the hole we are in.

A summary of the figures (and my thoughts)

20009 to 2010 comparison
October to November (last three months of data available in the release)

Spending is up £12billion
Of which interest is up £3.5billion
And welfare is up £2billion
Taxation meanwhile is up £8billion

From which we can learn the following.

Pretty much nothing.

Much of the minimal increased spending on services now may result from legacy rises from Labour’s last budget.

The welfare bill has risen (not unexpectedly) as the public sector squeeze has seen unemployment rise.

Taxes have held up reasonably well thanks to strong growth thanks largely to rapid construction recovery (in part, again, a legacy of labour policy to subsidise the restarting of mothballed house construction projects)

The interesting phase will be what happens in the next three to six months.

That is when we will see town halls sack lots of staff and VAT hit consumer spending at the same time as income tax (sorry, employee NI contributions) rise.

I would suggest that rapidly rising unemployment along with high inflation (pressed higher by the VAT rise) and a pay cut (in the form of NI) will hit the consumer economy hard and fast.

GDP will shrink back, tax receipts will be hit, and welfare bills will rise quickly. The budget deficit will worsen. And then we all have to hope that this gamble pays off some how over the long term.

AStateOfDenmark

And demonstrated by saying it that he has no idea what he is talking about. Spending set to carry on rising because of cuts to, erm, spending.

Yes, that is precisely what happens.

It is tiresome but it needs to be repeated to get through to these clowns: Government financials are not like those of businesses (and they’re certainly nothing like household budgets no matter how many deluded Tories think they are).

When a business cuts headcount, the cost drops out of the P&L. Not with national governments. People still need to be fed, clothed, housed. The welfare stabilisers kick in.

At the same time, because the government has depressed demand so much, those unemployed are joined by fellow unfortunates from the private sector. Some estimates (worse case I recognise) reckon that 4 times as many could lose their jobs from the private sector as are being made redundant from the public sector. That’s a huge hike in jobseekers allowances.

Then tax revenues fall as profits drop, and so, despite the all the propaganda to the contrary, spending cuts end up adding to the deficit.

Just like in Ireland.

10 – Please Ben, I know you like to play this tune, but just this once look at the numbers first. The reason borrowing increased this month was that although tax revenues increased, public spending increased more. The great bulk of this increase was not on welfare spending, which increased only marginally, but on health, defence and EU contributions. The cuts have not yet been implemented, and cannot therefore be driving these numbers.

Your continued ignorance on Ireland is depressing, but I think now irremediable.

heres the view of an independent economist from notayesmanseconomics blog

“We as a nation borrowed some £22.8 billion in November which comes on the back of poor figures in October too. If we compare this to a year ago then in November 2009 we borrowed some £16.7 billion so today’s number was up by £6.1 billion. Remember since then recorded economic growth and indeed inflation which should help these numbers have both been fairly strong so the figures are in fact even worse than they initially seem. As tax income rose then there is plainly a problem with public expenditure and most of it seems to be in the section unhelpfully labelled other current expenditure.

If we look for some perspective then we can look at the figures for this fiscal year so far and make a comparison with the same period in 2009. So far in 2010 we have borrowed some £99.9 billion which is only just below the £101.4 billion for the same period in 2009.

These are very troubling figures as they seem to be forming a trend and I have worries on three counts.

1. The UK government is supposed to be committed to austerity and yet public expenditure has risen more than expected.

2. Economic growth has recently been strong and should have helped the numbers.

3. Inflation has been strong too and this also helps the numbers via the impact of it on Value Added Tax and fiscal drag on income taxes.

As we stand George Osbourne has claimed to be a man of austerity and yet the figures do more than hint at a stimulus or at least of a lack of control. To borrow 6.7% of your economic output in the period April to November is some way away from his previous claims.”

No time for a novice maybe?

Tim J

How did you work out that the great bulk of higher spending was on health, defence and EU payments?

I’ve posted above that around half of the rise in spending is “other” rather than interest or welfare.

But it doesn’t say what “other” is. It could be Ministerial photographers for all that is expressed in the main stats release.

So what figures are you reading?

The numbers do suggest that the reality of the government is that it will – just like the previous Tory government – struggle to manage to keep down public spending over the life of the Parliament, though will maintain a level of strong rhetoric (seeking cultural shifts).

I do understand the distinct political advantage that the Left gain from misleading the public on this issue, by invoking folk memories of Thatcher (particularly as the Labour leadership appear to have gone AWOL) and tacitly supporting street violence, but it doesn’t seem to be a particularly honest or responsible way to proceed.

13 – ONS press release.

Public sector borrowing hit an all-time high with the November figure sitting at £23.3bn, up from £17.4bn this time last year, the Office for National Statistics (ONS) has reported, blaming extra spending on health, the European Union and defence.

The ONS figures themselves are pretty opaque.

I would also note that the European sovereign debt crisis has got worse over the last few months, not better, and that the UK has not been drawn into investor worries is something we should all be grateful for. Those that put “on the verge of bankruptcy” in inverted commas as if it was some kind of lie would do well to understand the concept of liquidity risk – as it is this that has tripped over pretty much every single victim of the credit crunch since 2008, and something that the UK will have to work hard to avoid for much of the next 5 or so years.

12/14/15/16

Basically, the premise of the OP and Labour’s line of attack is that the government is cutting too much too quickly.

The reality is that the government, has so far, cut nothing. It is following labour’s advice to destruction. Borrow more. Spend more. Watch your interest bill go through the roof.

17. ASOD

Watch your interest bill go through the roof.

So what?

As we keep pointing out to you, it’s going to through the roof following the cuts strategy.

So why not pay interest to keep people in jobs rather than paying interest to make them unemployed?

Tim J

I’m sorry to appear stupid but I can’t find that ONS press release.

I can find one press release but it doesn’t seem to be the one you (and quick search of google suggests others) are quoting.

http://www.statistics.gov.uk/pdfdir/psf1210.pdf

Do you have a link? It might offer some indication of where the figures come from to suggest it was about health, eu and defence spending.

Also – does the ONS normally put terms like “the ONS has reported” in its press releases?

Dear all,

Sorry to come late to this – just checked LibCon.

Cuts have started (BSF projects cancelled, public sector recruitment freeze, etc). Obviously this will get worse next year.

Our interest bill is not “going through the roof”, interest payments are currently smaller (as % of bopth GDP and govt spending) than in the mid 1990s. Yes this will rise, but the maturity profile of gilts is very long (14 yrs average) and bond yeilds are stil at historical lows.

Luis in particular – yes I am forecasting here and yes, I may be wrong. And if I am I’ll hold up my hands and admit that. But, I remain convinced (for the reasons set out above and elsewhere) that deficit reduction, as planned by Osborne, is not a sensible strategy.

I don;t actually argue that more public spending is the long term answer – although do support increases in capital spending until business investment is fully recovered.

My prefered long term solution is a rising wage share of GDP.

Sorry again to be late,

D

“The reality is that the government, has so far, cut nothing”

Even if this were true, it still doesn’t mean planned cuts for next year have had no effect. Private firms and charities that do business with the public sector will have downsized in anticipation of cuts, plus households where somebody works in the public sector may have reduced consumption so as to save for the likelyhood they may find themselves out of a job.

Expectations are a key feature of the how the economy peforms.

It is a continuing mystery to me to see responses to the credit crunch – the biggest financial crisis anyone here is likely to experience – that say ‘keep increasing spending, interest rates are low, there’s no need to worry about rolling over debt’, whereas it was exactly these impulses that got us into this mess to start with.

What the OP fails to admit (recognise?) is that the “cuts” are not absolute cuts in overall spending – as commonly portrayed – but cuts to planned increases expenditure. Government spending over the lifetime of this Parliament is forecast to be flat, or rise slightly, after the “cuts”.

23/

I have thought about the interest rate issue. And why I disagree with you.

4,500 words on this very topic from last year if you’re really, really interested.

http://duncanseconomicblog.wordpress.com/2009/11/24/cheap-money-interest-rates/

To be clear – I’d love the Left to rip apart the clear failings of much of the UK’s economic policymaking, and many of the present government’s specific policies. However, the most popular argument – that the government should continue to increase spending – as a rule – and that any cuts to planned expenditure will usher in the four horsemen of the apocolypse is slightly nonsensical.

“is slightly nonsensical.”

Which is why it is a straw man.

If you suggested that the government decide to change expenses rules for civil servants so that they had to use travellodges rather than 4 star hotels, nobody on here would say it is bad idea.

What we are against is cutting services, making people unemployed and doing it at such a scale that the collatoral damage will be immense. We’d rather reduce the deficit more slowly and through economic growth, with cuts occuring on an incremental basis that obeys the rule of first doing no harm. Adding half a million on the unemployment register breaks that rule….

24 – as someone who works in the debt markets, and having worked in rating agencies, I’m very suspicious of theory and prefer behaviour to models, particularly where liquidity and solvency come to mind. I now work in debt restructuring, and I would be as rich as Keynes if I had a pound for each time I’ve heard someone in deep trouble assuring their lenders that theoretically they had no problem paying their debt. Do you know what I mean by cliff risk?

@26 – but that’s exactly my point – the OP and others are making a quantative argument, saying it’s a sin to make ANY cuts to expenditure growth, and then following this up with qualitative arguments about how awful particular cuts are. It is clear the political advantage in taking such a line, though it is hard to believe any UK government doing anything else but reducing planned expenditure growth.

23 Another Tom

the “cuts” are not absolute cuts in overall spending – as commonly portrayed – but cuts to planned increases expenditure

This is a conceit.

These cuts are for all intents and purposes cuts to current expenditure.

If they weren’t, then no one would be losing their jobs.

24/ I never worked in debt markets directly (although two years in central banking and 4 in equity and derivative markets with a bit of bond exposure through ETFs).

But yes, I do understand cliff risk.

AnotherTom

“the OP and others are making a quantative argument, saying it’s a sin to make ANY cuts to expenditure growth…”

The article doesn’t say that at all. Read it again.

It classifies rapid cuts along the lines osborne is persuing as dangerous – and it argues that a policy based on cutting the deficit through cutting spending won’t work.

It doesn’t say no cuts are acceptable. It doesn’t say cuts are not part of a process. It doesn’t rule out cuts playing an important part. It just highlights that making cuts the primary method of cutting a defecit may prove utterly self-defeating.

Which is true. It may.

@29 people can lose their jobs at the same time as expenditure rises. In general I think people are confusing Tory rhetoric with reality, maybe befuddled by 13 years of the statist cultural settlement.

@30 I don’t see much evidence!

However, I’d be more interested in hearing a more full response to Luis’ comments.

We’d rather reduce the deficit more slowly and through economic growth

Economic growth can only diminish the cyclical aspect of the deficit.

Pretty good article. A fair amount of ignorance in some of the comments.

Basically all one needs to know here:

http://bilbo.economicoutlook.net/blog/?p=12847

“It doesn’t rule out cuts playing an important part. It just highlights that making cuts the primary method of cutting a defecit may prove utterly self-defeating.”

Maybe so. But criticising “cuts” but not accepting they come amidst a plan to not cut – indeed likely increase – government spending seems more peculiar.

I quote from the original:

“I’ve argued that a policy based on cutting the deficit through cutting spending won’t work. Now it seems to be coming true.”

Neither is the government cutting spending – overall – nor is it ‘coming true’, as it hasn’t happened. Other than that, he might be bang on right, as you say.

“Economic growth can only diminish the cyclical aspect of the deficit.”

True, but the structural deficit is a lot smaller, and balancing it is more achievable through evolution and efficiency savings. (small cuts as and when appropiate, pay freezes of staff, shift to online delivery of services, move offices to cheaper premises, contracts for one off projects coming to an end etc ). I’d also say shift to universal credit will probably strengthen the economy overall in terms of work incentives (although 65% taper rate needs to be reduced), and reduction in bureacracy.

AnotherTom

I’m not sure what you mean when you say there is a plan to increase public spending. Public spending has increased, but mainly because the cuts have not fully taken effect yet. The government is cutting spending. It is quite up front about that. It takes longer than a few months to make that happen but it is happening.

I agree that the “coming true” claim is premature given the lack of evidence in the figures. But the rest of your post leaves me a little confused.

Tim J

Did you have any luck tracking down the press release?

This from the left, who defended the ineffective stimulus on the grounds that “it takes years for economic policy to feed through before it can be judged”. You can’t have it both ways.

This from the left, who defended the ineffective stimulus on the grounds that “it takes years for economic policy to feed through before it can be judged”.

That depends on the kind of stimulus you mean. Some has faster impact than others, and I don’t believe anyone on the left was saying all impact would be the same.

This is a pretty weak post, Duncan. The two months you use from 2009 and 2010, August and September, there is only £125 million of a difference. In government finance terms that is a trivial sum so I can’t see how can extrapolate anything from that. As others have pointed out spending has increased April to November by £25.7 billion and taxes by £24.6 with interest payments accounting for around half the increase in spending. It is to be hoped that the defence and EU payments explain the high borrowing for November. However, traditionally November and December are high borrowing months every year.

What is slightly disappointing and worrying is tax revenue is not bouncing back as much as would be expected considering output and unemployment. What that suggests is there is a lot of underutilised capacity and underemployment of workers. The increase of part-time workers paying less tax being the manifestation. Therefore, although the economy is improving we are not generating enough tax revenue in relation to spending. What the Coalition need to happen to help close this output gap is an increase in investment. Without this they will only depress the economy with their fiscal consolidation. Therefore, the GDP revisions today were encouragingly. The annual growth in business investment was revised up substantially, from 4.6% to 8.9%. This is what we all need to see happening for the sake of the economy regardless of partisan political affiliation.

I would not rule out PSNB still undershooting for the year. Next months December number will probably be high and hopefully depreciate a couple of cents off sterling. However, January to Mach should be good months for tax revenue.

Richard

Although it may be hoped that defence and EU payments explain the deficit – it seems an odd hope since I can’t anything that suggests these have even risen, let alone make up a big part of the rise.

38/42 – I’m afraid I didn’t, though the fact that more or less every paper used the same phrase in reporting it suggests that the words come pretty much directly from it. This is Reuters:

The ONS said the deterioration in the public finances was due to higher government spending, a bigger contribution to the EU and significantly higher spending on health and defence than in previous years.

http://uk.finance.yahoo.com/news/UK-public-borrowing-hits-targetukfocus-779835843.html?x=0

I haven’t seen the breakdown of figures they’re using, but the ONS doesn’t usually lie about these things.

True, but the structural deficit is a lot smaller, and balancing it is more achievable through evolution and efficiency savings.

The Coalition is only planning fiscal tightening (cuts and taxes) to address the structural deficit, since the cyclical deficit can basically be left to look after itself. The OBR calculates the structural element of the deficit at £90bn pa.

Tim

I don’t mean to be rude so please don’t take offence, but “lots of people say it, so it must be true” is patently absurd in an age of spin.

I’ve now looked for this really quite extensively. I’ve looked through the ONS’ various figures, its press releases, other semi-related bulletins and publications. I even thought I’d found something at one stage, but that turned out to be about asset values for last year.

It also strikes me that the three listed items fit a suspiciously political pattern.

1 – EU bailout (in the news, some one else’s fault)
2 – Defence (plays to core support)
3 – NHS (plays to the claim of ring-fencing funding)

It is not implausible to imagine our political leadership sitting down and designing that response to questions about why ONS stats show the deficit remains high.

It is also not implausible that having placed that explanation, a lot of lazy hacks report it almost verbatim across a wide range of online news sources.

BTW

thatt hey all used the same phrase – and one that said “ONS reported” suggests that phrase came from some one other than the ONS – which would fit the posibility of it being placed by political-bods.

45 – possible, but surely it’s more likely that the ONS gave a press conference at the same time as the press release, and in response to the obvious question ‘what extra spending was it that led to the increase?’ replied with the three above. When news agencies report that ‘the ONS said’ they really don’t mean ‘the Government said in response to the ONS’, because they’re two very different stories.

I don’t mean to be rude so please don’t take offence, but “lots of people say it, so it must be true” is patently absurd in an age of spin.

None taken, but it’s also a bit of a leap to say ‘everyone says it so it can’t be true’. The ONS released the figures, every news outlet reporting those figures repotrs that the ONS say the unexpected spending mostly comes from three areas. It could be that this is untrue, and either the ONS is lying or in fact the gloss comes from Government and the ONS aren’t involved. Alternatively, the unexpected increase in spending could be coming from defence (we’re at war), health (it’s an unprecedentedly cold winter) and EU contributions (bailing out Ireland, and the Euro crisis). Occam’s razor and all that.

I think you are being too cynical, M4E. Large monthly spikes are quite common. The EU payments would just be in relation to our membership and nothing to do with the Irish bailout. We may have been paying our tithe to the subsidised French farmers. I noticed an article just this week with our subsidised lot boasting how much they were receiving this year. EU payments may be in relation to that largesse. Defence could be anything from UN to overseas leases of bases. The Ministry of Defence could have had lots of payments to make to domestic contractors, annual training bounty to the TA. There are lots of reasons why government spending is erratic.

Tim J

OK, see now it seems like we are in a debate. And I’m not even sure what we are debating. The “everyone says it so it can’t be true” comment makes me think there’s a debate here – as obviously no one thinks that, I’d never suggested it, and as such it’s the sort of “straw man” thing people do when they think they need to change the terms of a debate.

So I’ll just restate that it would be nice to have some indication that the figures exist, have been published, and actually say what is being claimed – and that I don’t think stating them as fact is very sensible without some evidence.

As for the occams razor thing – No one can find these stats from the ONS, and the ONS has offered no sign of ever having commented on them or published them. As such I’d suggest a simple explanation for that might be that they didn’t. (Most conclusions can be stated simply to claim the legitimacy of Occam’s razor)

Anyway, Let me know what we are debating, and I’ll try to catch up.

Richard

The thing is – I’m not saying any of that is untrue. All three might have gone up and constituted the greater part of higher than expected spending. They might have gone up for exactly those reasons. Or they might have gone up for different reasons entirely.

Or they might have gone down. Or they might have gone up marginally but actually other things were more significant in pushing up the deficit.

All I want is some figures to find out which of those or other permeatations are true.

I have a couple of pet hates – but high among them is not bothering to read evidence yet still feeling confidence in expressing as fact what that evidence might say or mean. It makes no sense to me that people do this, but people of left and right do it all the time.

oh – but yes, I am a cynical little git.

@ astateofdenmark, very simply, VAT will only raise that kind of revenue if people continue to spend and companies continue to buy, if people do not import VAT receipts will again be affected, it is a very simple circle which Osborne has broken.

I am amused at some of the comments on here that point out Duncan’s piece was not weighted with any economic proof, as an economist I dare say he could back up what he has written. I have actually read top economists back up exactly what Duncan is saying, Stiglitz and Blanchflower to name but two, there are a great many more. However, if it is pointed out to Duncan that he provides nothing in the way of back for his comments, what do these same people say of George Osborne?

George Osborne, David Cameron and Nick Clegg are taking a huge “unprecedented” gamble, nowhere in the world has this kind of experiment been taken and other countries financiers and Treasurers are looking at the UK with horror and bemusement. There is only two places where such measures have been taken 1) Ireland 2) Canada, and both of these countries for different reasons bare only a fleeting precedent for what Osborne is attempting.

Ireland is in the Euro zone and so it cannot set its own interest rates etc, but it is obvious that austerity measures have categorically failed there and the latest, look to be taken the same route. What happens if the latest austerity measures do not work in Ireland? I liken this treatment to smacking a child for being naughty, if the child continues to be naughty what then? How hard to you smack before you do lasting damage?
Canada cannot really be used as a precedent either as when they invented their “star chamber” when Canada’s economy was already in strong growth and Canada also has a very strong manufacturing and export market, thanks to Margaret Thatcher, Britain does not. The *only* way that Osborne’s measures stand any chance of working is if we suddenly and unprecedentedly increase our manufacturing and export market and it has to increase suddenly and sharply more than it ever has done, even when we had a good manufacturing base in this country, is that likely to happen?

Not to put too finer point on it, I take this opportunity to point my finger at the debacle that is Sheffield Forgemasters, what this Tory led government did there is absolutely astonishing, it is so short sighted that it beggars belief. If we were able to borrow £10 billion plus unending interest payments to bail out the Irish economy, or if Cameron could hand Clegg £100 million to waste on AV at a time when there are far more pressing issues, then why oh why oh why could this government not loan SF a paltry £80 million? To place British industry at the forefront manufacturing parts for green nuclear industry for the rest of the world, nowhere else makes these parts in this particular size. This would have secured British jobs, it would have made new jobs, SF would also have created new apprenticeships, subsidiary companies would have benefited and so would the Sheffield Hallam local economy. I believe the reasons to deny this loan were purely political.

I believe (and there is proof to back my points up) that Osborne is making a pigs ear out of the British economy, the borrowing figures prove the mess he is beginning to make and let us not forget that last August George Osborne increased government borrowing by a huge £3 billion to £15.9 billion, that was a rise on August 2009 when we were in the grips of this global financial recession. Osborne simply does not have the intellect or the ability to be chancellor and he is completely out of his depth. It is hard to point to one policy of this government that is not thwart with major flaws, not thought for the long term. it is as if each department has gone through the books cutting this, that and the other, producing a set of simple figures as savings, but has comprehensively failed to look at the bigger picture and of the problems and money it will cost to activate their proposed cuts. For this reason alone Osborne’s austerity measures are categorically doomed.
All this country can look forward to is spiralling unemployment and sharply rising inflation, which indicate this inexperienced government will accept the BoE increasing interest rates which will be the cause of mortgage and repossession misery to thousands, not to mention making repayments on other loans more expensive.
How will the Bank and the government get round reducing inflation, when this particular rise in inflation is not consumer led?