The scaremongers are out again so let’s be clear: government borrowing has risen – but Reeves should NOT be worried.
Look what happened earlier this month. The Bank of England was selling off bonds it didn’t need to, at high interest rates, and there was concern about borrowing, so interest rates rose and the government had to find the cash to cover it. That was an entirely manufactured crisis; it had little to do with anything Rachel Reeves did in government.
Now we have provisional borrowing figures for December last year, and they show that spending on public services and debt interest were up – but so were tax receipts.
The problem is that the tax receipts were offset by cuts in National Insurance that were imposed by the Conservatives while they were still in government. In essence, the Tories sabotaged what they expected to be the plans of the future Labour government, when they had the opportunity.
Buy Cruel Britannia in print here. Buy the Cruel Britannia ebook here. Or just click on the image!
The scaremongers will still have a field day with the figures. Borrowing hit £17.8 billion – according to the estimate, remember, which was £10.1 billion more than in December 2023, and £3.2 billion higher than the forecast by the Office for Budget Responsibility.
Interest charged on government debt was estimated at £8.3 billion – the third-highest amount since monthly records began in 1997.
But Rachel Reeves should not be worried about this. She is playing a long game, intending to bring down borrowing and increase prosperity over the length of the current Parliament – which doesn’t end until 2029 at the latest.
Right-wing commentators want her to cut public spending, as this would be an admission that Labour’s ambitions were too high and there is not enough money in the economy.
But Labour’s ambitions aren’t too high; if anything, they’re very low. And the UK is the world’s fifth- or sixth-richest economy so there’s plenty of cash washing around if you know where to get it.
This Writer would like to see her taxing the super-rich on their assets. A one- or two-per-cent tax would end any debt worries for the foreseeable future and the people being taxed wouldn’t even miss the money.
If that seems unpalatable, there are plenty of other possibilities – that have been put forward by experienced economists so there is no need to commission any research. All Reeves has to do is make a choice.
But the most likely option seems to be that she will do nothing, and wait for the markets to sort themselves out.
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The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:
Government borrowing has risen – but Reeves should NOT be worried
The scaremongers are out again so let’s be clear: government borrowing has risen – but Reeves should NOT be worried.
Look what happened earlier this month. The Bank of England was selling off bonds it didn’t need to, at high interest rates, and there was concern about borrowing, so interest rates rose and the government had to find the cash to cover it. That was an entirely manufactured crisis; it had little to do with anything Rachel Reeves did in government.
Now we have provisional borrowing figures for December last year, and they show that spending on public services and debt interest were up – but so were tax receipts.
The problem is that the tax receipts were offset by cuts in National Insurance that were imposed by the Conservatives while they were still in government. In essence, the Tories sabotaged what they expected to be the plans of the future Labour government, when they had the opportunity.
Buy Cruel Britannia in print here. Buy the Cruel Britannia ebook here. Or just click on the image!
The scaremongers will still have a field day with the figures. Borrowing hit £17.8 billion – according to the estimate, remember, which was £10.1 billion more than in December 2023, and £3.2 billion higher than the forecast by the Office for Budget Responsibility.
Interest charged on government debt was estimated at £8.3 billion – the third-highest amount since monthly records began in 1997.
But Rachel Reeves should not be worried about this. She is playing a long game, intending to bring down borrowing and increase prosperity over the length of the current Parliament – which doesn’t end until 2029 at the latest.
Right-wing commentators want her to cut public spending, as this would be an admission that Labour’s ambitions were too high and there is not enough money in the economy.
But Labour’s ambitions aren’t too high; if anything, they’re very low. And the UK is the world’s fifth- or sixth-richest economy so there’s plenty of cash washing around if you know where to get it.
This Writer would like to see her taxing the super-rich on their assets. A one- or two-per-cent tax would end any debt worries for the foreseeable future and the people being taxed wouldn’t even miss the money.
If that seems unpalatable, there are plenty of other possibilities – that have been put forward by experienced economists so there is no need to commission any research. All Reeves has to do is make a choice.
But the most likely option seems to be that she will do nothing, and wait for the markets to sort themselves out.
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:
Be among the first to know what’s going on! Here are the ways to manage it:
1) Register with us by clicking on ‘Subscribe’ (bottom right of the home page). You can then receive notifications of every new article that is posted here.
2) Follow VP on Twitter @VoxPolitical
3) Like the Facebook page at https://www.facebook.com/VoxPolitical/
Join the Vox Political Facebook page.
4) You could even make Vox Political your homepage at http://voxpoliticalonline.com
5) Follow Vox Political writer Mike Sivier on BlueSky
6) Join the MeWe page at https://mewe.com/p-front/voxpolitical
7) Feel free to comment!
And do share with your family and friends – so they don’t miss out!
If you have appreciated 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!
Buy Vox Political books so we can continue
fighting for the facts.
Cruel Britannia is available
in either print or eBook format here:
The Livingstone Presumption is available
in either print or eBook format here:
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:
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