Wednesday, April 22, 2009

The Budget 2009: My Comment.

Well, this government intends on borrowing eye watering amounts of money. In the net two years alone, if its laughably optimistic figures are to be believed, £381 billion. That is more than ALL OTHER GOVERNMENTS OF THIS COUNTRY HAVE BORROWED PUT TOGETHER!

As if that is not bad enough, the growth figures that future borrowing are based on are very optimistic. The net result is public debt will double.

Lefties the blogosphere over will be saying how this will ensure growth etc.

Rubbish. Firstly the numbers have no credibility in terms of showing how the public finances will be brought back to balance, and so drive up the cost of borrowing. Secondly borrowing is not free money, it is deferred taxation. As the tax rises and spending cuts to pay for it kick in, growth will be reduced.

The government think that growth will end up trending at 3.5%. This is a pipe dream. For a start the last 10 years of growth under Labour have been funded by both public and private debt. That can´t continue, secondly growth will be strangled because the government will have to pay back debt with higher taxes.

In short, we are in a very bad mess.

The BBC has this, with this report on David Cameron´s reaction , whilst Stephany Flanders has this.

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