Don’t you love articles by economic experts that put George Osborne down hard? This one, by Professor Simon Wren-Lewis on Mainly Macro, manages a double by putting down “biased newspapers” as well. Here he is:

Paul Johnson of the IFS has written that under Labour “national debt [could be] around £170 billion higher (in today’s terms) by the end of the 2020s than would be achieved through a balanced budget.” That was all that certain newspapers needed to start talking about a borrowing bombshell under Labour.

£170 billion is a meaningless number, and the end of the 2020s is a meaningless date. First, we should put everything as shares of GDP. £170 billion is about 10% of GDP, and debt is currently around 80% of GDP. However it would be completely wrong to infer that under Labour debt to GDP would be 90% of GDP by 2030. If they achieved current balance by financial year 2017/18, then my Excel spreadsheet says that with nominal GDP growth of 4% a year, by 2030 debt to GDP would be around 65% of GDP. (A few points below 65% if investment remained at 1.5% of GDP, a few points above it became 2% of GDP.) If the Conservatives balanced the overall deficit each year debt to GDP would be about 47% of GDP by 2030.

So a £170 billion bombshell actually means debt to GDP would have been reduced from 80% of GDP to around 65% of GDP. So the correct headline should have been “debt to GDP cut by a fifth in 2030 under Labour’s plans”. That is debt, which is much more difficult to reduce than the deficit. To say this is a ‘different interpretation’ is too polite – newspaper reports got it completely wrong. Who should you blame for this: Paul Johnson, innumerate journalists, biased newspapers? I’ll leave that to you.

For the more interesting part, in which Professor Wren-Lewis discusses the speed at which the debt-to-GDP ratio really should be reduced – a matter that has been pressed onto most voters’ minds recently – along with that dig at George Osborne, visit Mainly Macro.

Note also that, although he admits that the Tories would have a lower debt-to-GDP ratio by 2030 under these conditions, Professor Wren-Lewis does not speculate on the amount of damage this would cause to the state infrastructure and the British way of life.

Follow me on Twitter: @MidWalesMike

Join the Vox Political Facebook page.

If you have enjoyed this article, don’t forget to share it using the buttons at the bottom of this page. Politics is about everybody – so let’s try to get everybody involved!

Vox Political needs your help!
If you want to support this site
(but don’t want to give your money to advertisers)
you can make a one-off donation here:

Buy Vox Political books so we can continue
bringing you the best of the blogs.
Health Warning: Government! is now available
in either print or eBook format here:

The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here: