Borrowing more makes us poorer

How much more will the government have to borrow next year?
Lots

Does it matter?
Yes it does.

The government only has one policy to get out of this mess – spending more. They will spend and spend, to the limits of their ability to borrow and print it.
There is one huge problem with this. We have to pay the money back with interest. It’s just one enormous delayed tax bill.
I am all in favour of paying some tax to make sure we have enough good teachers, nurses and doctors, and to make sure the disabled are looked after and the unemployed have some help
I am not in favour of paying more tax to make sure the bankers have their bonuses, the spin doctors can lie some more to us, the quangos can carry on regulating the wrong things in the wrong way. I am not in favour of unelected regional government, a lot of quango government, and the growing army of officials intruding into our daily lives. That does not make us richer, it makes us poorer. If we have to borrow to pay for it, it is even worse. The government should get a grip on it now, before we drown in a sea of debt.
The Chancellor wrongly told us that he would only borrow £78 billion this year, and many in the media have obligingly reported that, seeing next year as the difficult high borrowing year. The actual figures the government published said they would borrow £157 billion THIS year, or well over 10% of our National Income. It now looks as if next year could be even dearer. All of these numbers of course are dwarfed by the huge liabilities now heaped on the taxpayer by the government’s irresponsible approach to supporting the banks.
Taxpayers are standing behind more than £500 billion of casino bank. How much more will that lose before they call time on it? Taxpayers are standing behind mountains of corporate and mortgage debt. How much more are we going to lose on that?
The authorities refusal to cut interest rates and ease money in the summer and autumn of 2007 will cost us dearly. This site called strongly for a different policy at the time. As the authorities persevered with driving by looking in the rear view mirror, it was bound to be a big crash.Recent news on the state of the real economy shows how big it is. That in turn means a further nose dive in tax revenues.
Still the BBC said this morning the Chancellor is “doing his best”. I don’t recall them saying that about Conservatives. The question they should have asked, if that is their view, is “Is his best good enough?” And “Can we afford it”.

This entry was posted in Blog. Bookmark the permalink. Both comments and trackbacks are currently closed.

15 Comments

  1. Brian Tomkinson
    Posted March 21, 2009 at 9:22 am | Permalink

    JR: “the BBC said this morning the Chancellor is “doing his best”

    This is pure opinion and as such should be no part of the BBC’s output. We all know of course that the BBC has increasingly become partisan in its reporting of news and current affairs. If they wish to continue in this vein fine sell them off and let us choose who we wish to listen to without having a compulsory charge for the privilege.

  2. THE ESSEX BOYS
    Posted March 21, 2009 at 9:32 am | Permalink

    An interesting question posed in The Spectator this week in relation to the vast waste of time and resources on the forthcoming G20/22 global gab-fest!…

    “What, by the way, happened to the banking regulatory system which G20 members promised to set up in the communiqué issued at the end of the last emergency summit, in Washington in November? Listed among the ‘immediate actions’ to be undertaken by 31 March 2009 was a promise to set up ‘supervisory colleges’ to monitor the activities of international financial institutions. Banks, according to the communiqué, were supposed to ‘meet regularly with their supervisory college for comprehensive discussions of the firm’s activities and assessment of the risks it faces’. Admittedly there is still a week left but has anyone yet spotted the bosses of Lloyds and RBS trouping off to a meeting with their ‘supervisory college’? I did contact the Treasury press office to ask what progress had been made on this issue, but at the time of going to press I had received no answer.”

    DOES ANYONE KNOW PLEASE?

    NB: They say that £5m is being paid to the stagers of the event within the £50m total budget.
    Clearly Prudence has not been invited!

  3. Brian Tomkinson
    Posted March 21, 2009 at 9:36 am | Permalink

    Listening to Conservative front benchers speaking about the economy I continually sense a lack of anger about the situation into which Brown has put us, coupled with a lack of purpose about wanting to take control and sort out this mess. The longer Brown stays in office the worse will be the mess but your party seems to be content to stand aside and witness the daily muggings. Perhaps you haven’t the stomach for dispensing the appropriate medicine?

    • mikestallard
      Posted March 21, 2009 at 6:24 pm | Permalink

      Who has been reading the Telegraph leader, then?
      And, as usual, they are totally right!
      This blog is full of the right attitude to this crass, self serving and tired government. If only the Conservative front bench were as frank and open! The sheer anger and incredulity shown, in civilized form, on this blog is simply not reflected in their statements and body language.

  4. "East Anglian Troy"
    Posted March 21, 2009 at 10:49 am | Permalink

    Are you just giving us a partial quotation from the BBC perhaps? Could it have been “doing his best to ruin Britain”?

  5. oldrightie
    Posted March 21, 2009 at 11:06 am | Permalink

    I strongly believe Brown’s trip to South America is yet another begging bowl tour. Is it possible that he’s about to become the biggest launderer of money in history?

  6. Acorn
    Posted March 21, 2009 at 11:42 am | Permalink

    This is all getting very depressing. To save recycling my earlier posts, I would recommend, if you haven’t already, watching the Peter Schiff video, posted by Waramess under “sovereign risk and bond bubbles”. It sums everything I would say today.

  7. chris southern
    Posted March 21, 2009 at 1:37 pm | Permalink

    The only thing that matters in the eyes of the current goverment, is the financial stability of the City of London.
    They have never cared about the rest of the country, as the financial sector not only brings in a lot of taxable income, but provides donators to the goverment (you only have to look at their donators and the sheer amount of money they have managed to recieve in the last couple of years to keep the party solvent)

    As for regional goverment, we are already run by unelected lobby groups forcing their opinion upon the people.
    sooner or later the gravy train will run out of fuel, that’s when the real rebuilding will begin, until then, the people will continue to be robbed blind of their money, assets and future labour.
    The banks own us, we are serfs once again.

  8. Lola
    Posted March 21, 2009 at 5:42 pm | Permalink

    Mr Redwood wrote:- “I am all in favour of paying some tax to make sure we have enough good teachers, nurses and doctors, and to make sure the disabled are looked after and the unemployed have some help”.

    I’m not. I am in favour of the State acting as insurer of last resort and operating a transfer payment system to provide people with basic funding to buy education and health care provided by private business which will be far better at ensuring that doctors and teachers are trained and ‘provided’ than the State is. I am also content to contribute to the great Ponzi scheme of social security so that those unfortunate enough to lose their jobs can be helped to find new employment, including relocation allowances, even as far as foreign lands, or whever the work is.

  9. mikestallard
    Posted March 21, 2009 at 6:28 pm | Permalink

    When the Chairman of the Bank of Scotland wanted to do something which would ruin his own bank – buy up a lot of sub prime mortgages – he did not bother to inform the board.
    The result was an inevitable collapse of his bank.
    Gordon Brown has more or less shut down parliament, he is surrounded by a few yes men and women in his bunker. Like Sir Fred, he is isolated. And his decisions (lending rate, for example) have been just as disastrous.
    Without proper consultation and, yes, argument, the wrong decisions get made.
    And, as with the Bank of Scotland, guess who is going to bail him out?

  10. James
    Posted March 21, 2009 at 8:18 pm | Permalink

    People forget about the interest payable on the loans. In one of Gordon Brown’s first budget he mentioned how any good house wife will tell you how paying of debt is good housekeeping. I am still waiting for that clip to be repaid now that we are doing exactly the opposite.

  11. alan jutson
    Posted March 21, 2009 at 9:39 pm | Permalink

    I see an independent report (todays news) on the Governments borrowing is now going to be £180 billion or more, so your figures and thoughts are correct.

    Also suggested that we will be the hardest hit, and will take the longest to come out of recession, and they think we would not be able to borrow any more for another incentive, its all gone !!!.

    So much for the “we are well placed” argument.

    Looks like we have maxed out on all of the credit cards now.
    With tax take down, and more unemployed being paid benefits, no tax from investment savings (no one earning interest) lower VAT take and the like, room for more dodgy schemes seems to be running out.

    Lets hope the Press realise before too long that attempting to support this Government is like p—ing into the wind.

  12. Cityunslicker
    Posted March 22, 2009 at 12:03 pm | Permalink

    Sadly, increasingly likley is that the Government will buy its own debt back through qauntitative easing. I don’t say this lightly, but once the socialist idiots who run new labour realise they can, apparently, pay for their client state just through the whisk of a pen; it will be hard to stop.

    We move towards ever more troubled times with each mistake made compounding the last.

  13. Ad
    Posted March 22, 2009 at 11:56 pm | Permalink

    Yes Lola forget about those disabled people let them rot there only a burden on future economic growth!!!

    Everybodys not simply numbers on a chart you know!

  14. Tony
    Posted March 23, 2009 at 10:46 pm | Permalink

    Hi John,

    Is your proposal just to leave people to ride out the recession then?

    Reply: Of course not. My propposals start with tough love for the banks to get them fixed sooner – please try reading the blog instead of retailing Labour lies.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

  • John’s Books

  • Email Alerts

    You can sign up to receive John's blog posts by e-mail by entering your e-mail address in the box below.

    Enter your email address:

    Delivered by FeedBurner

    The e-mail service is powered by Google's FeedBurner service. Your information is not shared.

  • Map of Visitors

    Locations of visitors to this page