This section of George Osborne’s 2010 conference speech is puzzling:
“We are already paying £120m of interest every single day thanks to the last Labour government. Millions of pounds every day that goes to the foreign governments we owe so they can build the schools and hospitals for their own citizens that we aren’t able to afford for ours. How dare Labour call that protecting the poor?”This graph, from the UK Debt Management Office shows that roughly a third of UK gilts, with a value of £274bn, are held by foreign investors (roughly the same proportion as is held by UK pension funds and insurance companies)
So two thirds of the interest on our national debt is, by definition, going to British pension funds, British banks, British savers etc. Would Osborne describe these as patriotic interest payments?So as you can easily see, the chancellor is merrily lying to everyone in this country yet again to gain political favour for his own bizarre ideologies. It would be laughable if this man was not in charge of the country's finances at such a vital time.
And why does Osborne assume that it is foreign governments which are holding this tranche of 0ur sovereign debt, rather than private investors abroad? The Chinese state famously holds a large pile of US Treasury bills. But I’ve never heard it suggested that the Middle Kingdom has a particular taste for gilts too.
I’ve spoken to the Debt Management Office and they say they have no breakdown of data over which overseas investors are holding UK debt. So I don’t know what Osborne is basing his argument on.
Two weeks ago, Nick Clegg argued that the UK’s present levels of debt interest are a “criminal waste of money that shouldn’t be lining the pockets of bond traders”. I think that argument is misleading, but I can at least understand the point he’s making. But Osborne’s inference that our debt interest is being used to build public infrastructure in foreign lands leaves me scratching my head. In any case, is it somehow worse to pay interest to foreign governments than foreign investors?
I think this is all worth commenting on because it highlights the strange way Osborne seems to think about the deficit. As Keynesian economists have been at pains to point out, the deficits that advanced economies are running at the moment are, to a large extent, a natural response to the jump in the private sector savings rate in recent years. There has not been a significant spending splurge. The problem is that tax revenues have fallen drastically. Governments could have started cutting their own spending when those receipts dried up, but that would merely have made the slump worse.
The problem is that Osborne still seems to see deficits as purely a result of government profligacy. And he has the bizarre idea that the interest payment are all going to foreign states. The truth is that the majority of those payments are staying in Britain. And when British demand for UK bonds falls, that will surely be a sign of economic recovery.
The UK economy and the way Chancellor George Osborne is running it is all going to end in tears and even more frightening, we have business leaders in this country (32 of them) again poking their nose in to the economy and the running of the country, writing and signing letters for the Telegraph right wing newspaper. You will remember this is not the first round robin letter that George Osborne wrote and then got business leaders to sign, he did this concerning national insurance contributions just prior to the 2010 election. Then that letter said that a rise in NICs would be a tax on jobs and the Tories promised they would not do it, well they did not, not for the business leaders, but they DID for us, the ordinary taxpayer, so yet again we have the Tories caught out in a lie. George Osborne and David Cameron could not even lie straight in bed, if their lives depended on it!
These people are NOT politicians and they have no idea about the running of this country, these businessmen are no doubt the same culprits that signed the NICs letter, the ones who have their snouts in the Tory trough and stand to gain from this government selling off our NHS, education, countryside, quangos and local authorities, even the police service is to be politicised. these are the people that are brown nosing the government in the hope of receiving peerages and knighthoods.
It is time this "cronified"
"Aren't you glad that we've got a 2nd-class History graduate - who has no experience whatsoever of finance or economics - in charge of the Treasury"?
Source: The Independent