When I asked the Chancellor yesterday in the House if there is some limit to how much the UK government can prudently borrow and print, he was reluctant to answer.
I pointed out that if we flex the state credit card too much, we could face another run on the pound, or a buyers strike on public debt, or need a trip to the IMF or some other international money lender.
I was giving him an opportuntiy to reassure us all that he was in control of the build up in public debt, and that he had worked out the maximum limit that was safe. I would have welcomed a number in his answer as well as some reassuring words.
Instead he decided to answer only half the question, the bit about how much he could safely print, and ignored the other half about how much he could safely borrow. He confirmed that the current printing programme was reasonable, without specifying if that was just the first £75 billion or the whole £150 billion. Treasury sources, I am told , don’t have a clue how much it will take.
I suspect, along with many other commentators and the markets, that debt is running well above the levels set out in the Autumn Statement. We should also remember that the Chancellor on that occasion persuaded most people that he was just borrowing £78 billion this year, when the figure hidden at the back of the FBR was twice that. Come the budget he will have to give us more plausible updated figures, revealing the true horrors of the position.
The Prime Minister we read is keen on yet another fiscal stimulus for the economy at Budget time. That’s code for printing and borrowing more. Yet even he has chosen some more careful words for his Guardian interview. Maybe the Chancellor is at last showing some independence and is trying to warn the PM that there do have to be limits to how much they can borrow.
It is mystifying to see people roundly condemn too much borrowing by the private sector in the past, only to do the same on an even larger scale in the public sector and think there is no price to pay.
Click here to read the exchange between John Redwood and Alistair Darling from Hansard.