Why we need to cut Government spending
This year, 2013-14, the Office of Budget Responsibility (OBR) predicts that the Government will spend £111m more than it raised in taxes and will have to borrow the difference. This is known the as the Budget deficit, which is a bit of a misleading description as it is just this year’s borrowing, not the total borrowing say Harris & Co accountants Northampton.
To put this year’s borrowing in perspective, any single year’s borrowing had never been above £100b until 2009-10 when it hit £157b. To put it another way, the amount the Government has borrowed in 2013-14 is the fifth biggest on record.
To put this year’s borrowing into a different perspective, it amounts to 6.8% of GDP (which is the country’s annual income). The last time a single year’s borrowing was that much of GDP was in 1975-76 and it help to trigger the bail out of the nation by the International Monetary Fund.
At the end of 2013-14, after this year’s borrowing is added in, the total Government debt will be £1239.6b – some 2.5 times what it was in 2008. A decade ago it was merely 30% of GDP. Now it is 75% and still rising.
By the time the total Government debt is predicted to peak in 2016-17, it will have hit £1,500b and an eye watering 80% of GDP.
And yet, all we hear are talk of “the cuts”. From where I am sitting, the Government do not appear to have cut spending by very much and further savage cuts are need if the nation is to ever stop borrowing, never mind start paying some of it back.