In November 2008, the Institute of Economic Affairs published Nick Silver’s A Bankruptcy Foretold: The UK’s Implicit Pension Debt (PDF), which argued that if the UK’s debt is calculated in line with generally-accepted accounting principles, it is something over £4 trillion.
In June this year, an update was published, putting the full scale of the British state’s liabilities at £4.8 trillion, which is around 333% of GDP or £78,000 per person. For comparison, the Budget Red Book (page 2) forecasts a peak net public debt of 70.3% of GDP in 2013-14, falling to 67.4% in 2015-16.
All this could have profound implications.
Martin Durkin’s controversial documentary Britain’s Trillion Pound Horror Story, transmitted on 11 November, took up the theme, arguing that we need to rethink radically the role of the state if we are to deal with the full scale of the debt, including all our liabilities…
As Chairman of the APPG on Economics, Money and Banking, I hosted a panel discussion on the documentary featuring film maker Martin Durkin, the Adam Smith Institute’s Dr Eamonn Butler, IEA Director General Mark Littlewood and CityAM’s Editor Allister Heath.
The discussion was dramatic:
- Martin insisted only lower taxes would get us out of our present hole.
- Allister described the growth of the state, the flaws in monetary policy and the regulatory regime which caused the crisis, calling for lower public spending.
- Mark said we should be “hysterical” and “apoplectic” about the state’s true liabilities before making some spectacular remarks about our democracy and the election (see from min 13 in the video below).
- Eamonn felt things were even worse and was not sure our grandchildren would wish to pay the benefits we are awarding ourselves.
Here’s a video of the introductory remarks and the responses to the first question. Martin gets the last word on the likely public reaction to doing the right thing:
Panel discussion on Britain’s Trillion Pound Horror Story held in Parliament from Steve Baker on Vimeo.
The original documentary may be found here.
What really really hacks me off is that a lot of us have been saying all this for years. As a ‘practical economist – I run a retail financial advice business – a huge amount of this was patently obvious years ago, but all I have ever got for saying it is grief from the Financial Services Authority.
It fair makes me blood boil.
So, now we have finally recognised this mess can we please get on and do something about it PDQ?
Oh, and I have also been saying – again bringing grief on me – that the ONLY way out of this mess is to slash taxes and slash government spending. But, we must also reform banking (in the manner according to Carswell) and absolutely pursue sound money.