Friday, January 8, 2010

Structural makes up 75% of national debt

Following on from an earlier post back in December on structural debt versus cyclical debt and the PBR’s approach to tackling it (Government debt £300bn and counting), it appears that the structural debt actually accounts for something like 75% of the national debt. What this means is that even without a global recession our national debt would still be something like £225 billion.

This came out today when Shadow Chief Secretary Phillip Hammond opened for the opposition during the Commons debate on the Pre-Budget Report and quoted Treasuary figures.

“According to the Treasury’s figures, the economic recession accounts for about a quarter of Britain’s deficit—that is the cyclical part of the deficit, which economic recovery will eventually eliminate—but three quarters of it is structural, and requires a structural response.”

He has also pointed out that the government's continued reasoning for our debt level as being bailing out the banks isn’t true.

“The real structural crisis that needs to be addressed is not caused by the Government’s support for the banking system, as they like to imply. In fact, none of this year’s £178 billion deficit is directly attributable to support provided for the banks.”

As I wrote previously the PBR’s response in trying to stimulate the economy alone, and failing to cut expenditure seriously suggests that the government believes that there is no structural issue at play which at the end of the day is just plain wrong.

Orriginal story from ConservativeHome

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