Archive for the ‘State’ Category

Labour was Profligate

May 1, 2015


(Click the chart for an unfuzzy version)

The New Stateman, Paul Krugman and FT Alphaville have recently given credence to the notion that Labour were fiscally responsible going into the financial crisis.

While Finland and Denmark were achieving a surplus amounting to 5% of GDP in 2007 the UK ran a deficit of 3%. The difference 8% of GDP makes is huge. The UK’s GDP was £1,732 billion in 2014, 8% of that is £138.5 billion. When a politician or economist uses a low percentage you can be sure it’s a gargantuan number.

Sweden, Germany, the Netherlands, Luxembourg, Belgium, Estonia, Ireland, Cyprus and Spain along with Finland and Denmark had surpluses in 2007. With the exception of Germany and Cyprus they all ran surpluses in 2006 too when the UK had a deficit of 2.9%.

The United Kingdom’s descent from fiscal Europa League contender to QPR-like also-ran was complete just in time for the recession. While Portugal matched the UK’s 3% deficit going into the financial crisis only Hungary had a worse deficit than Labour’s Britain. Hungary.

Pedants corner: these figures are based on Maastricht criteria so are marginally less favourable to the UK than the UK government’s preferred figures. Also, the chart says EU countries but data from the non-EU Norway is included over the past four years – I have no idea why Eurostat has them in this dataset .


50% Income Tax likely to cost Britain £600m pa

April 22, 2009

“Likely”, the possible cost could be over £1bn.

Loss of Revenue

This chart is from the very recent Institute For Fiscal Studies briefing note that was anticipating a 45% rate (see page 14 for chart):

The most startling aspect when the IFS looked at the sums:

It would appear that the Treasury has not allowed the behavioral response to affect revenues other than income tax receipts.

This is quite extraordinary. A very cheap piece of electioneering by Labour will turn into a very expensive debt for taxpayers.

Peas and Bonds

April 30, 2008

That pea being Black Eyed Pea member “”. He repeated an oddity that keeps cropping up:

“If America really wants to make a difference, it should stop importing China’s products and pay back its debt

Now the former is a personal choice, the latter is… well, it makes no sense.

America issues debt in the form of treasury bonds and China along with any other individual or institution on the planet can buy them. Perhaps too much paper is issued but given the low yields on current treasuries its obvious there’s plenty of demand to be a creditor.

The US dollar has depreciated against the Renminbi in recent years, moreso than the bonds yield. Effectively the Chinese government is subsidising the US but at no cost to the US government or taxpayer.

Restricting access to US debt would currently benefit China, not hinder it.

The Irrelevance of Northern Rock

March 14, 2008

The UK has added circa £111bn of assets and £110bn of debt to its balance sheet. A back of the envelope calculation would suggest that, even with a major housing recession, the British taxpayer will only have to cough up a small fraction of the amount the press suggest.

A 40% real-term drop in house prices and an exceptional default rate on mortgages of 10% would mean a loss of only £4.5bn, £75 per person.

The British taxpayer spends £4bn per annum on the World Bank, £10bn is given in net subsidy to the European Union, the proposed ID card scheme will cost £6bn just to set up and £20bn has been wasted on the NHS computer operations in the last few years. There is so much fat on the lumbering beast that is the British government that at this point a few more pounds is just a little more blubber.

By far the greatest economic worry for Britain is the public sector pension obligation. Amounting to £1,000bn these future payments have quadrupled over the past 10 years. While future social security and pension funding is at the forefront of all facets of the US government economic policy there is no talk in the UK of the, proportionally, far larger debt. It makes the targeting of Northern Rock for political wrath so puzzling.