Additional UK government borrowing continues to reduce

The latest figures for UK government borrowing show it ended the most recent financial year to March at £52 bn, a little below the March 2016 forecast. It confirms that the UK economy has done well over the last year, bringing in extra tax revenues from growth to pay more of the bills for public services.  Total state debt stood at 86.6% of GDP on the official definition. If we adjust this for the debt the Bank of England has bought up, the figure falls to 65%.

This level of additional borrowing shows the recovery from the extreme levels of additional debt at the end of the last decade has gone reasonably well, though a bit slower than the original plans in 2010. These figures exclude future state pension liabilities, as they also exclude future tax contributions to pay for those pensions on the pay as you go model all governments have operated. The figures do now include the debts of Network Rail, guaranteed by the government, which the Labour government classified as private sector debt.

There is no need to raise taxes from here to reduce the deficit further. A bit more growth will be the best way of cutting borrowing, as more people get jobs reducing their need for benefits, and as more tax revenue comes in from the growing turnover of the economy. Tax revenue is up strongly from companies (plus 21%) as their profits recover, and is up by 4.7% from Income Tax as earnings go up, without any need for higher rates of tax.

The aim of policy should be to boost productivity and output by encouraging entrepreneurship, and ensuring government is run more efficiently to assist in economic improvement.



  1. Iain Gill
    April 26, 2017

    Come on John, we can usually depend on you to be a beacon of education and truth. This is a Cameron style explanation. There maybe an election on but there is no need to treat the people for fools or misdirect them.

    1. Hope
      April 26, 2017

      JR, so based on your figures it would be £38 billion if we deducted overseas aid and £26 billion if we deducted EU contributions? In other words it could be halved as we have nothing to show for this spending. If in addition we had the bonfire of quangos promised by Cameron it would be even less!

    2. Ken Moore
      April 26, 2017

      Indeed this is an analysis looking through rose tinted glasses…

      The 86% of GDP figure excludes quasi debt obligations. According to the ONS, debt alone accumulated by financial interventions stands at 147% of GDP.

      There are another £ 1180Bn of unfunded public sector pension liabilities and 170bn of PFI commitments.

      Altogether debt stands at £4.4 trillion or 244% of GDP or £135,000 for every household.
      This figure doesn’t include mortgage and consumer debt that add a further 97% of GDP

    3. acorn
      April 26, 2017

      You cynic Iain. The budget deficit for muppet consumption, dropped from £72 billion to £52 billion. Strangely, the government’s net debt (PSND) increased by circa £130 billion; which near enough follows the government’s net cash requirement (PSNCR). Perhaps, we should get Chancellor Hammond to explain that to us muppets.

      These numbers are insignificant compared to the numbers the government’s Treasury had to stump-up to bail out the banksters back in 2008/9. Have a look at . Labour or Conservative governments, would each have done the same bail-out. It would have been much cheaper to have nationalised them on day one, and let the greedy shareholders and debt holders take the hit. The Treasury would now own some nice little earners.

  2. Lifelogic
    April 26, 2017

    There is indeed no need to raise taxes from here to reduce the deficit further. So why are the Tories indicating that they might well do, even during an election compaign? Why no proposals to cut the waste, the red tape and to go for cheap, on demand energy? Why the damaging energy price control proposals, the wage controls, the building on employee “rights”, the gender pay reporting ….

    Still it seems they have dropped, hopefully for ever, Osborne’s and Hammond’s absurd quarterly tax reporting proposals.

  3. formula57
    April 26, 2017

    Let us hope that come 9 June we have a Chancellor who agrees “There is no need to raise taxes from here to reduce the deficit further”.

    As for borrowings, £52 billion is rather modest now we know there has never been a better time to borrow £500 billion!

  4. Mark B
    April 26, 2017

    Good morning,

    A terrible set of figures. And way off what we were promised sometime ago by the then Coalition Government.

    The Net contributions to the EU are around £10bn.

    The Overseas Aid budget is around £14bn.

    As we can see, just those two things could halve the amount we borrow. I am not an accountant or an economist, but these basic figures would lead me to conclude that neither of those two represent any value to the UK.

    Best get rid !

    1. JoolsB
      April 26, 2017

      Exactly. Yet May has promised to continue with the ludicrous arbitrary aid budget and if she gets the majority she’s hoping for, I’m not sure I trust her to give us a clean Brexit either but one where we will still continue to contribute to the EU coffers for years to come. Nor have they got the guts to stop the skewed Barnett Formula which is totally unfair to England where the brunt of the cuts are being felt. That would save a few more billion.
      Oh for a real Conservative Government!!

      1. Chris
        April 26, 2017

        My sentiments exactly, Jools B.

    2. Lifelogic
      April 26, 2017

      Cancel HS2 and Hinkley scrap all the green crap lunacy grants and we are there! Then cut state sector remuneration/pensions to the same as the private sector and half the number of state employees. Many produce very little of real value as output, and would surely be a far happier and more contented doing a real & productive job in the private sector.

      1. Leslie Singleton
        April 26, 2017

        Dear Lifelogic–Join HS2 to HS1 and make sense for once I say. Manchester to Milan and Madrid was original reason. Save all the destruction and expense in London. As planned, only people within walking distance of Euston get any kind of deal. Everyone else has to jump hoops to get to Euston so they might as well jump a few different hoops to get to a new Junction just North of London. Revivifying the Grand Central from Marylebone – at little cost because it is just sitting there waiting to be used, correct loading gauge, bridge height and all – would also make shedloads of sense so naturally has been ignored.

      2. APL
        April 26, 2017

        Lifelogic: “Cancel HS2 and Hinkley scrap all the green crap lunacy grants and we are there!”

        Trouble is these are mostly welfare for the upper middle class. They are on government support and it makes the unemployment figures look good.

    3. Hope
      April 26, 2017

      Mark, Well said. However, the coalition govt accepted it did not know the exact amount it pays the EU! Moreover, it is the same with immigration, estimates not actual numbers. It is difficult to understand why the govt cannot be exact with its figures.

      We are still waiting for the cull of quangos and perhaps our counc tax charge could be reduced or limited as promised. Now they seek to include add ons which are, and should be, part of the ordinary budgets.

      Once again we had the 10 percent pay rise for MPs, at most a part time job. Plus exemptions form tax and all the perks while advocating capping nurses pay! £77000 for a part time non qualified MP is far too much especially taking into account the whip system. The Lords could be dispensed with over night without any problems for the public. We do not need 1500 politicos, the majority of whom want to defy the public will and be governed from abroad by the non elected EU commissioners!

      1. anon
        April 26, 2017

        More direct democracy, would help to thicken the wafer thin veneer we have at present.

    4. acorn
      April 26, 2017

      The foreign aid budget, about £9 billion, has Ts & Cs applied to it, such that it gets spent on stuff priced in Pounds Sterling. Think of it as a government indirect subsidy for British industry. Shutdown DfID and transfer its remit to the FCO; would make sense and save some admin costs.

      The net transfer to the EU is nearer £7.6 billion a year on average. There are number crunchers, who will tell you that subscription / investment, will return about £35 – 40 billion in added UK GDP, at least.

  5. David Cockburn
    April 26, 2017

    All positive economic news. You leave the key issue to your last paragraph; measures to increase productivity are critical to our future success. The major problem is the poor productivity of the public sector and the NHS in particular. What can be done about it?

    1. bigneil
      April 26, 2017

      The productivity of the NHS seems to be going great. Talked to a staff member from the local maternity ward who told me they are working flat out . . and about 90% of the pregnancies were from unemployed foreign born women. Free NHS and then child benefit , , why come to work when we pay them to arrive and do nothing?

      1. Timaction
        April 26, 2017

        Indeed. You can see for yourselves who these women are as they are now in large numbers, mostly unemployed pushing prams with another couple of children on tow in our City centres. Come one, come all for free housing, health and education. Encouraged by the legacies at our expense, worse under the Tory,s than Labour.
        No need to guess why we have housing, health, education rationing. Not in my name. Foreign aid should be redirected to pay for this folly.

  6. Mike Stallard
    April 26, 2017

    Mr Redwood, you have got the EU Brexit completely wrong. But when you write posts like this you are excellent! Well written.

  7. Peter Wood
    April 26, 2017

    Good Morning,

    This borrowing amount could have been reduced by 25% (13 Billion Pounds) had the government not given money away under the aid law.

    This law needs to be repealed or amended such that no foreign aid be given until the UK government achieves a budget surplus in the year in which it is paid.

    1. Lifelogic
      April 26, 2017

      Foreign aid should obviously be judged and set regularly depending on the conditions that pertain. It is patently absurd to have a legally binding percentage set in advance. Just as it would be to have one for anything else such as tractor production, wage levels, gender quotas, or fix the price of energy or indeed anything else much. Circumstances change by the day. Top down evil socialism or bottom up, market driven, job creating, best for all, competitive efficiency. It should not be hard to choose for real Conservatives. But they do not seem to be in charge.

    2. Timaction
      April 26, 2017

      Then don’t vote for more of the same. A ridiculous policy when we are taxed more through our Council tax above inflation to pay for our elderly’s social care. I heard a leading Tory bragging how we’re paying for foreign children’s education. Doesn’t make me proud when i see the size of our own classes and state of education.

  8. Richard1
    April 26, 2017

    Let’s hope we get some bold & radical free market policies in the Conservative manifesto to generate that needed growth. It’s never going to be an easier time to get a mandate for such measures than now. Mrs May needs to be bold and imaginative.

    1. Bob
      April 27, 2017

      They plan to scrap the triple lock and the tax lock and protect the arbitrary 0.7% for foreign aid.

      Is that bold and imaginative enough?

  9. Narrow Shoulders
    April 26, 2017

    If there is no need to raise taxes further why has your government raised the upper earnings limit for NI by £2,000 grabbing £200 from every person earning over £45K from April 6

    This appears to be a direct reversal of the much trumpeted increase in the higher rate tax threshold which allowed the same group of people to keep an extra £300 per year.

    Not really rewarding the strivers are we Mr Redwood?

    £52 billion is still a lot to borrow when we are giving away half of that annually for others to spend on our behalf (£14 billion to the EU and £12 billion on overseas aid). This before looking at the value government gets for its other spending.

    Still always easier to spend other people’s money isn’t it?

    1. Mitchel
      April 26, 2017

      “Still always easier to spend other people’s money isn’t it?”

      Especially when it is filtered through the hands of your sons,daughters,friends,university chums,etc who are the mandarins,charity czars,quango queens,NGO wallahs,consultants,rapporteurs and lesser parasites before it reaches the “intended” beneficiaries.

      1. Dennis Zoff
        April 26, 2017

        Good comment: To the “reality point” and “non-politically” succinct!

        I am guessing you are from the private sector where wealth is created? Unlike the Government’s profligate spending of tax payers money with minimal accountability or demonstrable returns in tax investment!

      2. Bob
        April 27, 2017

        I suspect that the various middlemen you enumerate are indeed the real beneficiaries of the scheme. The poor people of the third world are just used as a cover to prevent criticism of the huge quantities of our money that are being plundered.

  10. Ian Wragg
    April 26, 2017

    Government spending is out of control. Taxes are at 45% GDP and a further 5% is borrowed. France has 57% going to the state and look how that’s turned out

    Mrs May said last week the Tory party was and is a low tax party. God help us If we get a profligate government any time soon.
    Many voters are angry with the determination to spend £13billion on aid whilst preaching austerity at home.

    1. Lifelogic
      April 26, 2017

      The Tory party are as Cameron kept saying “is low tax at heart” but alas never in any of their actions in these they are tax, borrow and piss down the drain merchants just like the other left wing parties. May and Hammond particuarly so.

  11. alan jutson
    April 26, 2017

    I agree John, but no government seems to like the self employed, and all governments want to raise more and more in tax by stealth or other means to cover their uncontrollable spending, and poor legacy vanity decisions/projects and Foreign Aid programmes.

    Just look at all the green taxes, which do absolutely nothing to protect the environment, and the recent farce of the Probate (Death Tax) policy set up to screw even more money out of anyone who has been financially prudent.

    1. David Price
      April 26, 2017

      It has got to the point that when you phone the HMRC Trust and Estates helpline you are greeted with a request to contact the Justice department directly if you are phoning to complain about the probate tax. You could not make this up!

    2. Nig l
      April 26, 2017

      Do not forget a massive increase in the tax on house sales and buying insurance. Interesting JR makes the point that the BOE and the Treasury are owned by the same organisation, namely HMG. He omits to say that he (HMG) views all assets as ultimately theirs hence every time they waste more money HS2, Overseas Aid, Green Projects, Defence Procurement, third airport delays, useless computer projects etc, it is the ‘piggy banks’ of people who have been prudent, that they raid.

      1. Lifelogic
        April 26, 2017

        Indeed it is. Thus killing the economy and productivity.

  12. Prigger
    April 26, 2017

    There is an air of unreality in the financial world. I’m hanging onto my £3/2s/6d before I further invest in anyone’s stock market.

    Macron got a part win in France so shares went up 4%. Why? Trump says he is going to reduce Corporation Tax ( without thinking he might not be able to do it. ).The stocks go up 2%. Why?. Canada just now is piloting a scheme to pay a guaranteed income of over $11,ooo and slaps 15% tax on foreigners buying houses. Trump says he is slapping a tariff of 15% on Canadian soft wood ( 28% of US houses use Canadian softwood as a frame..$3,000 worth of wood per $250,000 house at the moment.
    Here the council taxes keep rising.
    I’ve already started saving my plastic bottles in anticipation of they being refundable. I may make a killing, economically of course!

  13. oldtimer
    April 26, 2017

    Tax policy is central to efficiency. What we have now is inefficient. It distorts investment decisions, it complex and thus expensive to administer for both the tax payer and the government. Hints and comments by the PM and others do not encourage me to think or believe that needed tax reform is on the Conservative party agenda.

    1. Lifelogic
      April 26, 2017

      Indeed the absurd complexity of the tax system is as damaging to productivity as are the absurdly high rates.

  14. Bert Young
    April 26, 2017

    I wish Hammond would get the message and understand that lower taxes and boosting the efforts of entrepreneurs would do much to lower borrowing . So far he has had to retreat on some of his measures as the result of those who have breathed heavily on his shoulders .

    The Conservative manifesto will , hopefully , clarify and reassure people like me that lower taxation is the message to win votes . Of course targeting Corbyn is understandable but there are other issues equally convincing .

    I have recently raised the question with my local Conservative MP – who voted to remain , as to whether I should support him . I don’t want to vote for anyone who will handicap the terms of our Brexit negotiations . So far he has not replied to my e-mail .

    1. Chris
      April 26, 2017

      I would feel far more confident if Mr Redwood were Chancellor. I do not think that Hammond exhibits much financial expertise or common sense. The Conservatives, and the country, deserve far better.

  15. Roy Grainger
    April 26, 2017

    “If we adjust this for the debt the Bank of England has bought up, the figure falls to 65%.”

    Why should exclude that, unless the BoE is never going to re-sell that debt back into the market and is never going to ask for it to be redeemed ?

    Mr Hammond has already intervened to damaging effect in the election campaign by indicating that an increase in taxes is exactly what he wants – odd how Mrs May is so tolerant of his unhelpful interventions on Brexit and taxation alongside his incompetence in announcing budget measures which he immediately has to reverse.

    Reply IF it is redeemed the Treasury pays and the Bank has a receipt. As the Bank and the Treasury belong to the same owner it is just cancelled.

  16. A.Sedgwick
    April 26, 2017

    If Corbyn and McDonnell were in charge the shockwave would result in Ms Lagarde controlling the economy very quickly. So the Conservative steady as she goes philosophy is obviously better, but there is a distinct lack of vision, it ignores our horrendous national debt and endless current account deficit propped up by national asset sales to overseas buyers and a continuing falling £. The tax maze, far too much government, EU cost and overseas aid also prevent our balancing the books, which the vast majority of us have to do.

  17. Antisthenes
    April 26, 2017

    Despite the best efforts of some Conservative ministers to boost productivity and create a wealth creation environment there are many more factors that are assiduously working to achieve the opposite. So what progress we are seeing is far below that which is possible but at least thanks to the fact that Labour or other left wing party is not in government we are seeing some. Thankfully we will soon see one of those negative factors removed the EU. If only the public would wake up to the dangers of left wing ideologies and dogma and so allow enterprise and innovation to unlock it’s full potential then productivity and wealth creation would be boosted at an unprecedented rate.

  18. norman
    April 26, 2017

    Two positive comments: Mrs May is manifestly sincere, in the way she has stepped up to her present role. People forget the personal cost, health-wise, and age-wise, that such service entails. Many former Labour voters, especially the intuitive women, appreciate this. They will support her genuine good sense, in a world where its impossible to please everyone, even in her own party.
    On the question of Foreign Aid, it would be a sad day for Britain if we were to be so poor (mean-spirited), that we could not fulfil our exemplary role in the world in this regard. The problem is not the aid, but the way it is attributed – as is the case with so much other Public Sector spending. If a stronger mandate is secured, one would hope such problems can begin to be addressed more radically and effectively, though it is bound to be a long haul.

    1. Chris
      April 26, 2017

      How about fulfilling an “exemplary role” in our own country by how we treat our ill in hospital, our elderly people, our special needs individuals, our own disadvantaged people – the list goes on and on before one even touches on infrastructure problems, housing needs, education deficits.

  19. JM
    April 26, 2017

    Can anyone tell us what the take from Corporation Tax has been over the years as the rate has been reduced? Labour keep saying that they will increase corporation tax to pay for everything. Would an increase yield more or less money or make no difference?

  20. agricola
    April 26, 2017

    It is a positive trend, no more. Reduce government involvement in our lives , encourage enterprise and put yourselves down for a modest percentage to cover essentials. This way you will not put the golden goose to flight. Deal with the excesses in the way that some businesses operate against the people. Be more the conductor of the music than the composer.

  21. NHSGP
    April 26, 2017

    Total state debt stood at 86.6% of GDP on the official definition

    Official definition. Hmmm.

    What’s the real world definition?

    720% of GDP

  22. John Probert
    April 26, 2017


    I hope you can help the government run an effective Social Media Campaign
    to counter act this lot. As Mr Obama & Mr Trump have demonstrated it can be
    quite powerful.

  23. margaret
    April 26, 2017

    86.6 % of GDP to me sounds incredibly bad even when corrected to 65%. As I have mentioned previously in an unpublished comment the very low hours p/t employees 1 – 10 hours are sometimes out of the tax bracket . Many want more hours to make a living but cannot get them . Money would turn over a lot more easily with substantial jobs at a reasonable wage.
    Jeremy Hunt mentioned this am during an interview that Nurses wages in the NHS are not to rise. I have worked in the NHS for most of my life , but am paid privately . This has been the ploy to reduce hours and wages., but it doesn’t work . I practice at the level of 8B and certainly have the qualifications to justify this , but have not been allowed to get a substantial post in the NHS since 1995 and get a low wage . If fairness and distribution of salaries owed by experience , qualifications and talent was awarded to its employees then tax collection would increase concomitantly. The problem is managers see employees as a threat if they come up with solutions to problems or exceed in their abilities , so knock them down . This is competition gone wrong . We are all in this together.

  24. ian
    April 26, 2017

    does that include 12 billion mortgage sale, and the 13 billion student loan sale, also the 6 percent of Lloyds, and i hear RBS is going up for sale as well this year. I think your government still at 70 billion a year, because of lower growth of 1.8 last year.

    1. John Finn
      April 26, 2017

      does that include 12 billion mortgage sale, and the 13 billion student loan sale, also the 6 percent of Lloyds, and I hear RBS is going up for sale as well this year

      They might affect the debt but these items are irrelevant to the deficit.

      Regarding the Lloyds sale, it might not even affect the “net debt” since it could just involve a transfer from assets to reduced liabilities on the government balance sheet. I’m only surmising here, John Redwood is far more qualified than me to clarify the position on the sale of bank shares.

      Reply Of course the total debt and deficit includes the positive effects of asset disposals as well as the negative effects of acquiring more assets.State owned Bank debts are accounted for as a distinct item.

      1. John Finn
        April 26, 2017

        Actually ignore my earlier comment. Of course the sale of an asset must affect both the deficit as well as the debt since it reduces the borrowing requirement by the value of the sale. I think I must have been thinking of “net assets”.

  25. Peter Martin
    April 26, 2017

    I wish we could have a little more lateral thinking about the deficit from politicians of all parties. It must be self evident that the Government’s deficit has to be everyone else’s surplus. Or vice versa. So ‘promise’ of a government surplus is a ‘threat’ that everyone else should be in deficit.

    If we then divide up everyone else according to where they live and change the wording a little we have that:

    Government Deficit = Savings of Private Sector + Overseas Trade Imbalance.

    We shouldn’t attribute cause and effect too casually, but nevertheless it is easy to see that if Government wants to reduce its own deficit, it also has to actively encourage a lower trade deficit and encourage everyone to save less and/or borrow more.

    There’s no easy options there politically. A lower trade deficit would have to mean a lower exchange rate. Encouraging yet more borrowing at the present time when everyone has previously over-borrowed may give us some temporary respite but it can’t be sustainable in the longer term.

    1. Ken Moore
      April 28, 2017

      We all know that, technically, a country controlling its own currency cannot “go bankrupt” in that currency. But, realistically, this is little comfort. The value of a currency can be destroyed by hyperinflation, as in 1920s Germany or modern Zimbabwe. Likewise, the foreign exchange value of a currency can slump, making imports (including essential items) unaffordable.
      Meanwhile, the policy of ZIRP is promoting borrowing. Borrowing amounts to having something today, at the expense of having less in the future. Of course, this is most visible in formal “debt”, on which basis the UK, for example, “owes” £4.9 tn (of which just under £2 tn is public debt, the rest private). But formal debt is not the only kind of futurity. Britain has unfunded public sector pension commitments of about £1.4 tn, and private pension schemes are in deficit of close to £1 tn. Other Western countries are in similar straits. These are not “debts”, but “quasi-debts”. Technically, a state could slash public sector pensions, and stand by and do nothing as private pension schemes collapse. But I doubt if either is “practical politics”.
      So, what do we do? Governments could try to “print” their way out of this, but the risks are FX crash and/or hyperinflation. They could raise pension ages, and might do so, but this would have to be a big (and hugely unpopular) hike to do much good. They could raise interest rates, and thus boost returns on fund assets – but this could crash asset markets, including property, and inflict huge burdens on mortgage payers and others with debts – and could also mean a huge increase in the cost to government of paying interest on its debt.
      However you look at it, boosting “today” at the price of “tomorrow” is damaging, but appeals to political short-termism. When the bill turns up – which it will – the banking system will be in the front line. I don’t know if the 2008 rescues can be repeated without destroying faith in the currency. This is when government faces two temptations. The first is to unleash inflation, destroying the real value of existing debt. Something of this sort looks almost inevitable, because we’re in a “can’t pay, [so] won’t pay” situation

  26. John Finn
    April 26, 2017

    I’ve been keeping an eye on HMRC Tax Receipts throughout this past year and I agree they now appear to be growing strongly. March was a bit of a damp squib but overall 2016-17 was not a bad year for public finances.

    Interestingly, I note that UK debt interest this year was £49.1 billion so does this mean we’ve more or less borrowed money simply to service our debt

    1. Ken Moore
      April 26, 2017

      Interestingly, I note that UK debt interest this year was £49.1 billion so does this mean we’ve more or less borrowed money simply to service our debt.

      That sounds very much like a Ponzi scheme – which of course it is reflecting how real economic growth has been displaced by the spending of borrowed money.

      The Ponzi economy simply continues for as long as irrationality prevails, and then implodes……

  27. APL
    April 26, 2017

    JR: “Additional UK government borrowing continues to reduce ”

    In other words, UK government borrowing continues to increase.

  28. Ken Moore
    April 26, 2017

    Weasel words alert ‘additional UK government borrowing continues to reduce’ .

    We may hear much about those damaging “cuts”, on everything from the NHS and care of the elderly to our schools and police. But how often are we told that public spending rose last year from £761 billion to £784 billion, and is due this year to hit £797 billion.

    The Conservatives have taken on Labour’s mantle as the ‘party of scroungers’ terrified of upsetting the welfare funded block vote. Mrs May is just another spendthrift Blair clone.

    – I wish JR would stop treating us like fools and trying to turn every topic into a Conservative good news story. Please stop the constant apple polishing Dr Redwood and get back to what you do best – campaigning for real Conservative values.

  29. getahead
    April 26, 2017

    “The aim of policy should be to boost productivity and output by encouraging entrepreneurship, and ensuring government is run more efficiently to assist in economic improvement.”

    You know that John but does Phillip Hammond?

  30. Chris
    April 26, 2017

    I have always thought we should be looking at significant tax cuts to boost the economy and yet we have a Chancellor apparently determined to do otherwise. I see Trump is planning a massive boost to the economy by cutting taxes, and longer term that will ensure that government borrowing will reduce as the boost in the economy will in itself generate more wealth and more revenue to the Government. Hammond should take some lessons from the US. He will, I think, result in stifling our economy, or at least holding it back when it could really take off when we leave the EU proper.

  31. Russell
    April 27, 2017

    If the Bank of England holds such a large proportion of our debt and is a public bank what is the logic in not writing it off? Would it be considered systemically destabilising? A vast amount of our taxes are spent on debt repayments and it seems the biggest saving that could realistically be made. It would be a game changer.

    Even if they were to only stop charging interest and just accept payment on the principle loan this would radically boost money available to the Government which could either be invested in public services, used to reduce taxes or a mixture of both.

    Am I missing something?

    Reply They do credit the interest paid to the Bank back to the Treasury

  32. Lindsay McDougall
    April 28, 2017

    I suspect that your optimistic projections include allowance for the effects of fiscal drag, the mechanism whereby inflation pushes up taxes because it pushes people into higher tax rates for the same real income.

    You write of State debt being bought up by the BoE, reducing State debt from 86.6% of GDP to 65%. Is this the effect of QE? If so, the BoE, which is a State institution, has increased its debt, unless it wriggles out by printing the money. Is this something we should be pleased about?

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