A question?
By Tony Gillam - Gedling
Originally published by East Midlands Liberal Democrats
I was abroad on Budget Day and so missed a few things that interest me. Perhaps members can give me the facts.
The Government managed the magnificent achievement last year of reducing the deficit from £120.9bn to £120.6bn. In his autumn statement, the Chancellor announced that he was including £2.8bn from the sale of 4th generation licences in the year's accounts. This is a one off which will reduce the borrowings for one year but not reduce the deficit.
The cost of borrowing the £120.6bn to cover last year's deficit is likely to be £2.75bn, or thereabouts.
So the deficit for this financial year presumably begins at £120.6 + £2.8 + £2.75, or have I got it hopelessly wrong? (Total £126.1bn, or more than the year before.)
Gedling
Please reply to webmaster@eastmidslibdems.org.uk
Steve Coltman - Loughborough comments
No not wrong, but the interest payable on this year's deficit will presumably only accrue next year? And you are right to point out that this year's deficit is eased by a one-off windfall but need to check that last year's deficit did not benefit similarly. The point is that the improvements have stalled, and £120bn deficit is still scarily large. Most sensible people will agree that cuts alone won't work. Some are arguing that increased government spending will stimulate the economy such that the increased tax revenue will more than compensate for the increased spending. I am no economist, I have no idea whether that would work or not. However, recent reports suggest that the tax income is going up. Finger's crossed.
Steve Coltman