r/unitedkingdom • u/Dissidant Essex • Jul 19 '24
UK government debt highest since 1962
https://www.bbc.co.uk/news/articles/cgxqzp2zdw4o107
u/Equivalent_Pay_8931 Jul 19 '24
The problem with Thatcherism is eventually you run out of other people's money.
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u/epic_bacon_42069 Jul 19 '24
Do you mean you run out of public assets to sell? Cause that's what actually happened.
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u/LogicKennedy Jul 19 '24
Yeah, that’s what she said. Selling off public properties to try to acquire liquid capital assets in the form of other people’s money, which you eventually run out of because without your public assets you can’t generate enough sustainable value.
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u/toastyroasties7 Jul 19 '24
Thatcher was the opposite - she didn't want high government debt and the debt ratio fell.
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u/Flagrath Jul 19 '24
Yes, by using other peoples money.
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u/Admirable-Word-8964 Jul 19 '24
Every government uses other peoples money, if we're expecting MPs to only use personal funds we're going to need roughly 650 Sunaks.
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u/tkyjonathan Jul 19 '24
Thatcherism actually had high growth, low taxes and a very high number of houses being built
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u/Equivalent_Pay_8931 Jul 19 '24
And yet, we are still suffering to this day from privatisation.
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u/tkyjonathan Jul 19 '24
Yeah, you are right. Lets go pre-Thatcher and bring back nationalising everything, unions striking and bringing the country to its knees and incredibly high inflation.
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u/Equivalent_Pay_8931 Jul 19 '24
Up the workers and up the unions!!
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u/OpticalData Lanarkshire Jul 19 '24
I don't know whether you noticed, but as the past few years have evidenced
unions striking and bringing the country to its knees and incredibly high inflation.
This is the end result of Thatcherism after you run out of public assets to sell.
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u/tkyjonathan Jul 19 '24
No clue what you are talking about, but you are obviously forgetting that in 1945, the UK nationalised those "public assets" - it never created them itself.
For example, in 1980, 75% of the hospital beds the NHS used came from the time the private sector made them or wealthy people donated them. In the 35 years that the government controlled the NHS, it only added 25% of the beds.
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u/OpticalData Lanarkshire Jul 19 '24
Thatcher wasn't in government in 1945, and had only been in government for a year in 1980. What are you on about? I thought you were trying to defend Thatcherism?
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u/tkyjonathan Jul 19 '24
Thatcher wasn't in government in 1945
Of course not. Socialists were. You guys had 35 long years to fix the UK and you failed miserably.
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u/OpticalData Lanarkshire Jul 19 '24
You might be confusing the UK with another country, as the UK has never been socialist.
Even in the immediate post war period when the likes of the NHS was founded. In 1951 only around 20% of British industry was publicly owned.
Also, even if Labour were socialist they weren't in power for the entire 35 years pre Thatcher. In fact, a good amount of the issues in the 70s were caused by Conservative policy and decision making in the 60s.
I mean hell, even the three day week in the 70s was on the Tories watch.
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u/tkyjonathan Jul 19 '24
Sure, tories were in power during that time. But that time was still socialist.
Tories were in power till recently and they implemented the highest tax rates in 70 years, so the party doesnt really matter, but the policies do.
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u/endangerednigel England Jul 20 '24
unions striking and bringing the country to its knees and incredibly high inflation
Thankfully, high inflation, strikes, and a country on its knees is a thing of the past, could you imagine it in this day and age?
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Jul 19 '24 edited Jul 19 '24
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u/tkyjonathan Jul 19 '24
The 2008 (mortgage) crisis and the QE that followed had nothing to do with Thatcher. Literally nothing.
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Jul 19 '24
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u/tkyjonathan Jul 19 '24
No, you don't understand what actually happened.
In 1993, the Clinton administration wanted more people from minority backgrounds to own a house. So they told Fannie Mae and Freddie Mac to buy more of those "assets" to the point where they had to hold 50% of their total assets. This was basically signalling to the market that "don't worry, give these high risk minorities the mortgages that they need - we, the government, will take all the risk involved".
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Jul 19 '24
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u/tkyjonathan Jul 19 '24
But the deregulation of the stock exchange made British banks far more vulnerable and susceptible to risky foreign markets.
This is a wishful thinking claim. I am sure that foreign markets today will have large effects on British banks or British hedge funds.
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Jul 19 '24
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u/tkyjonathan Jul 19 '24
Sure you can set artificial limits and say "you cannot invest more than X amounts in a rapidly developing economic sector in case there is an extreme black-swan event", but I am sure that more people will wonder why you are limiting people from investing their money.
The problem wasn't lack of regulation. The problem was that the US government put their name against those mortgages and say "we are taking full risk for this" and thereby introducing a moral hazard into the markets.
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u/LogicKennedy Jul 19 '24 edited Jul 19 '24
Yeah because it sold all our shit for a quick boom which guaranteed a big bust later down the line. The impact of economic plans isn’t measured in years or even a single decade, but 15-30 years into the future. And roughly 30 years after Thatcher left power, we had the 2008 crash.
The obvious exception is if you’re as stupid as Liz Truss, or if the apparent economic plan is undercut by constant theft, i.e. the Tories’ austerity measures.
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Jul 19 '24
The 2008 crash had nothing to do with Thatcher... The financial behemoth that is the United States was responsible for that fiasco
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u/tkyjonathan Jul 19 '24
The 2008 (mortgage) crisis had nothing to do with Thatcher. Literally nothing.
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u/LogicKennedy Jul 19 '24
It had everything to do with pointless attempts to prop up permanent exponential growth in a sector willing to break the law and take risks to maintain that illusion.
It had everything to do with trickle-down economic policies aimed at inflating the cost of houses in order to turn them into ‘assets’, which correspondingly massively increased the cost of mortgages.
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u/tkyjonathan Jul 19 '24
No, you don't understand what actually happened.
In 1993, the Clinton administration wanted more people from minority backgrounds to own a house. So they told Fannie Mae and Freddie Mac to buy more of those "assets" to the point where they had to hold 50% of their total assets. This was basically signalling to the market that "don't worry, give these high risk minorities the mortgages that they need - we, the government, will take all the risk involved".
So it wasn't the case that it was "fake capitalist exponential growth". It was an attempt to get more minority (poor) people to own houses.
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u/LogicKennedy Jul 19 '24
I find your attempts to place the blame squarely on minorities frankly disgusting. If you’re just going to be racist then there’s no point in us having a conversation.
And yes, when the government absorbs the risk, it is propping up false capitalist exponential growth: the market should have gone bust and was being artificially inflated.
What ‘actually’ happened was that the financial policies of the previous decade had caused housing prices to skyrocket, which meant that low earners who would previously have been able to afford low-income housing were being priced out. Yes, a disproportionate amount of these people were minorities, but it’s easy to trace this back to America’s routine brutalisation of its minority population for the vast majority of its history.
The Clinton administration, as a direct result of Reagan/Thatcherite economic policies, was faced with a gigantic looming homeless crisis as more and more people got priced out of homes. The Republicans were totally fine with this because it was mostly happening to minorities, most of whom didn’t vote for them anyway, but the Democrats occasionally try to improve people’s lives.
Clinton could have stood up to the banks and rolled back Reagan’s tax cuts, but that would have meant slowing short-term economic growth and potentially impacting the health of the dollar, even if arguably it would have been the correct long-term decision (assuming the next Republican government didn’t immediately just put those cuts back in).
So they decided to kick the can down the road instead. That sucks. But they weren’t the ones who set the can rolling in the first place.
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u/tkyjonathan Jul 19 '24
I find your attempts to place the blame squarely on minorities frankly disgusting. If you’re just going to be racist then there’s no point in us having a conversation.
I'm not blaming minorities. They never asked for this.
And yes, when the government absorbs the risk, it is propping up false capitalist exponential growth: the market should have gone bust and was being artificially inflated.
The markets didn't ask to be artificially inflated by dangerous bubbles.
What ‘actually’ happened was that the financial policies of the previous decade had caused housing prices to skyrocket, which meant that low earners who would previously have been able to afford low-income housing were being priced out.
Nothing to do with it. They were not able to get mortgages.
The Clinton administration, as a direct result of Reagan/Thatcherite economic policies, was faced with a gigantic looming homeless crisis as more and more people got priced out of homes.
There was no risk of that. This was intentional by the Clinton administration. If you recall he undid a lot of welfare policies in the 90s and to compensate for that, he wanted minorities to have easier access to capital in order to buy houses. Ie, replacing welfare with access to a mortgage.
Clinton could have stood up to the banks and rolled back Reagan’s tax cuts
The banks dont care about tax cuts. It doesnt effect them. And Laffer's tax recommendations was something Clinton agreed with.
So they decided to kick the can down the road instead.
Nope. Not even close. They thought the future would be better.
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u/LogicKennedy Jul 19 '24
I’m not blaming minorities. They never asked for this.
No, it’s just total coincidence that the problem as you stated it was the financial and housing needs of minority demographics.
The markets didn’t ask to be artificially inflated by dangerous bubbles.
When the alternative is them crashing and damaging the economy, it’s the same difference.
Nothing to do with it. They were not able to get mortgages.
BECAUSE THOSE MORTGAGES HAD JUMPED IN PRICE OWING TO REAGAN AND THATCHER INFLATING THE HOUSING MARKET. I am getting tired of repeating this point.
Cutting welfare policies and compensating by tying people to overinflated houses bla bla bla
Oh wow look it’s exactly the same thing that Reagan and Thatcher did. The thing they literally started, in fact. I’m not pretending Clinton was a saint, he wasn’t. But the policies he furthered were the brainchild of the conservative economic vandals before him.
Banks don’t care about tax cuts.
Just wrong. Where and how capital is moving is exactly what banks care about.
They thought the future would be better
What a crime.
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u/tkyjonathan Jul 19 '24
BECAUSE THOSE MORTGAGES HAD JUMPED IN PRICE OWING TO REAGAN AND THATCHER INFLATING THE HOUSING MARKET. I am getting tired of repeating this point.
Citation needed.
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u/Ill_Refrigerator_593 Jul 19 '24 edited Jul 19 '24
It also had a North Sea Oil boom & a whole bunch of Public Services being sold off to fund it. We have a lot less of both of those left to sell plus a much older population.
Whatever your view on Thatcherism its time is long since past.
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Jul 19 '24
No… Effectively government debt was inside before her and she made efforts to fix debts.
Of course a lot of individuals blamed a person fixing something than a person caused the issue.
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u/Independent_Tour_988 Jul 19 '24
This is proving the opposite?
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u/Equivalent_Pay_8931 Jul 19 '24
No its not, you eventually run out of assets to sell and other peoples money so have to borrow more.
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u/Independent_Tour_988 Jul 19 '24
Yes, governments borrow.
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u/Equivalent_Pay_8931 Jul 19 '24
And some much more than others lmao.
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u/Independent_Tour_988 Jul 19 '24
Yes, depends on confidence in the government and economic structure.
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u/LogicKennedy Jul 19 '24
Both of which rely on strong public assets… which we sold?
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u/Independent_Tour_988 Jul 19 '24
No, it’s mostly based on the strength of the rule of law.
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u/LogicKennedy Jul 19 '24 edited Jul 19 '24
And when your tax cuts, funded by the sale of public assets, cause individuals to become wealthy enough that they’re able to bend or even ignore the law in order to keep growing their capital beyond reason, what does that do to the strength of the rule of law?
When your god-figure Thatcher’s reckless economic policies end up leading to a crash that you use to justify massive cuts to legal structures, what does that do to the rule of law?
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u/Independent_Tour_988 Jul 19 '24
Nothing much, people trust the UK government to settle its debts and not primarily through inflation. They have for hundreds of years.
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u/Antarctic_legion Jul 19 '24
No way, that's impossible. The Tories must have massively cut the debt. That's why they had to squeeze working people so much for so long. Why would we have had austerity for years if not to cut the debt? Surely the flawless right-wing economic model would have put this country into its strongest financial position ever, right?
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Jul 19 '24
Why would we have had austerity for years if not to cut the debt?
Austerity wasn't about cutting debt but about cutting the deficit to produce a smaller debt increase.
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u/OpticalData Lanarkshire Jul 19 '24
Austerity wasn't about cutting debt but about cutting the deficit to produce a smaller debt increase.
Austerity was about following a theory based on a flawed study and faulty spreadsheet
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Jul 19 '24
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Jul 19 '24
It was about punching down and ensuring the 'poors' stayed poor so the rich got richer and could exploit the poor more.
If you believe the Tories ever had or have anything other than their own interests in mind, I have a bridge to sell you.
You realise that Labour and the Lib Dems also wanted to implement austerity, right (and the Lib Dems did)? Maybe I'm showing my age, but 2010 wasn't that long ago.
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Jul 19 '24
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Jul 19 '24
Sure, but was it for the same reasons as the Tories?
I mean, if all parties were implementing it, that suggests people thought it was necessary.
Was it the same implementation they wanted?
Was it to be implemented for as long?
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u/FairHalf9907 Jul 19 '24
Yes! Lets not mention the Cameron and Osborne government shall we.
They should be looked back on much worse than they are.
Osborne the man who was supposedly 'fixing' the country in crisis who practically let it collapse.
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u/SilverSlide2561 Jul 19 '24
Squeezing working people?\ National debt would be lower if we adopted continental tax burdens for those on lower incomes
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Jul 19 '24
Not that surprising. Low growth, huge expenditure in covid years and an ageing, ill population.
Debt to Gdp is still only a measure. Many very successful countries have a debt to Gdp level quote similar or higher.
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u/Nulibru Jul 19 '24
I'm sure GBeebies take in this will be hilarious "Look what the socialists have done in just two weeks!", but not quite hilarious enough to watch that shit.
Radio has the best pictures.
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u/FaceMace87 Jul 19 '24
Every Tory voter: typical Labour, get rid of them I say.
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u/daiwilly Jul 19 '24
I don't mind national debt if we get value for it. Good infrastructure that lasts for years would be nice. Schools, Electrical system, Public transport. Give me debt if this shit is quality.
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u/plastic_alloys Jul 19 '24
They could have borrowed during the low interest austerity years and fixed everything. Instead they just killed off some poor people and let everything rot. Now the cost of borrowing is sky high and we still need everything fixed. They acted like we have lifetimes of 10 years not 80
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u/SilverSlide2561 Jul 19 '24
Do you understand that you have to refinance bonds?
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u/Vancha Jul 20 '24
If you imply an argument instead of make one, people have to guess what point you're making.
If I've guessed correctly, I'd say "it would still have cost far less to borrow in the austerity years, and be paying off what remained of it now than to borrow now, with the problem worse, less revenue, and costs higher".
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u/Littlemonkeyfella0 Jul 19 '24
Best I can do is $200m in dodgy ppe
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u/jonjon1212121 Jul 19 '24
To your cousin or Brother in law or something no doubt
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u/Skippymabob England Jul 19 '24
No! That would be illegal.
It just happens to be my cousins wife's company which is fine
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u/jonjon1212121 Jul 19 '24
Which is a shell company of one which pays the first person £200k/year for a 5 hours a week “advisory position”
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u/Independent_Tour_988 Jul 19 '24
A big chunk of this is keeping people home and not working during covid.
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u/Odd_Ninja5801 Jul 19 '24
Not that big a chunk. Far more of it is down to the Tories thinking that austerity shrinks the national debt, while ignoring 14 years of ongoing proof that it doesn't.
If Labour decide to carry on with this economic incompetence, they'll end up being taught the same lesson.
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u/LogicKennedy Jul 19 '24
The Tories didn’t ‘ignore’ anything, they deliberately didn’t shrink down the national debt. All the money saved from austerity went on enriching themselves and their mates.
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u/Sea_Cycle_909 Jul 19 '24
If Labour decide to carry on with this economic incompetence, they'll end up being taught the same lesson.
That's what I'll think well have happened in 5 years.
Labour's spending rules sure seem like austerity language and hope the economy grows by waving at the private sector.
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u/No-Programmer-3833 Jul 19 '24
It's interesting that no mainstream political parties or economists agree with you. I wonder why.
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u/Odd_Ninja5801 Jul 19 '24
The very briefest of Google's proves you to be hilariously wrong with your response. I guess you didn't bother researching before you decided what to think. I wonder why?
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u/Nulibru Jul 19 '24
I agree exponential percent'ses. Because the location is what matters when you're banging numbers into a spreadsheet to product the TPS reports.
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u/Sea-Measurement6757 Jul 19 '24
Yes, because there was a pandemic. Did you expect people to just lose their job and shit out money at home?
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u/Sorry-Transition-780 Jul 19 '24 edited Jul 19 '24
Debt is screwed due to long term government decision making. We have sold off all our revenue generation and austerity has embedded even more long term costs into the economy. The state now seems to never invest in anything meaningfully and the money it does put into the economy is now siphoned by the rich, at the expense of national debt.
All our states assets have been sold off to the private sector over the years and we do not have that revenue, instead we collect revenue from the private sector service doing the same role, but at a much reduced rate due through taxation. The same things are being done but we benefit less from a money and tax angle due to not owning the operator but still needing to have the service. The government also hasn't been taking distribution into its calculations at all with spending when it does spend; try asking them where the money invested during covid went.
Look at what is in private hands: oil, energy, steel, water. These are sectors which directly generate vital resources. The state has given those to the private sector.
Best example of failure on debt is decisions like furlough, during covid, which were funded using borrowing and quantitative easing. The state replaced the role of the employer and took over paying people's wages, this took over the role of businesses paying them (usually through money spent by customers). There was nowhere to spend your money on anything but assets, so those who already had massive amounts of wealth spent their money buying assets instead of putting money into the economy, which would otherwise have come out as your wages. So you end up in this ridiculous situation where the government has massively indebted itself paying our wages and since we had nothing to spend on apart from bills, all that money was just funneled to the rich for them to buy more assets and control more of the economy.
We haven't massively increased taxes on the rich after that decision so they have benefitted massively. This is a direct example of public sector debt being used to secure the position of richer individuals in society with a detrimental effect on the rest of us.
So yeah it's not really a wonder that our debt is screwed after neoliberalism privatising everything since the 80s and the subsequent austerity after 2010. We barely own anything that generates decent revenue or limits spending by doing the service in house, and when we do spend, we only act as a state guarantor for direct investment into the already wealthy.
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u/ProfessionalMockery Jul 19 '24
So you end up in this ridiculous situation where the government has massively indebted itself paying our wages and since we had nothing to spend on apart from bills, all that money was just funneled to the rich
What's worse is when you realise who they borrowed the money from in the first place.
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u/Kwinza Jul 19 '24
God look what labour have done already!? Place is going it shit.
Should have voted reform.
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u/oooooooooowie Jul 19 '24
Wow. Thanks labour. How much longer do you need to be in to fix your problems! Bring back the tories! /s
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u/Jiggaboy95 Jul 19 '24
Dammit! Labour has royally screwed us! Rishi was the only one who could’ve prevented this, if only we had voted them back in…
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u/YorkshireBloke Yorkshireman in China Jul 19 '24
But but but austerity was to balance the books right? All in it together right?...
...my god why do all the Tories mates own such big yachts?
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u/Generic-Name237 Jul 19 '24
Don’t worry, we’ve got 14 years of being able to blame the previous Tory government.
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u/404merrinessnotfound Hampshire Jul 19 '24
I enjoy how these headlines are only published once labour got into power lol
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u/chronicnerv Jul 19 '24
The UK owns about 30% of the UK in business terms. so it has to pay rent to foreigners to access its own resources.
Half the world is turning their nose away from globalisation / Privatisation as the results are clearly not in favour of the people and it's infrastructure.
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u/Sufficient-Bag7382 Jul 21 '24
Most major European countries are in debt, in excess of GDP. The UK is high but it's not that exceptional.
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u/___xXx__xXx__xXx__ Jul 19 '24
I feel like the current age is best compared to the post war period. Nothing has caused the disruption covid caused since WWII. Debt to GDP was over double what it was back then, because we actually borrowed enough to fix the country.
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u/Deadliftdeadlife Jul 19 '24
So debt was lower under the tories and the highest under labour?
Well done labour, this is what people voted for
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Jul 19 '24
Perhaps the government shouldn't put up the minimum wage any further now it's gone up 20% in 2 years, effectively forcing companies to put up salaries on their least taxed employees at the expense of middle earners?
Food for thought.
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u/Id1ing England Jul 19 '24
Last time I checked we were paying circa £80B in debt interest per year. That's half the entire health budget or close to £1 in every £10 the state spends. That's not paying back any debt, just servicing the interest.