Friday, 21 August 2020

Our new £2 trillion debt

So we know Covid-19 is not nice and has caused the UK Government and indeed the whole world a lot of problems and lives.

What is really shocking though is the economic cost. Throughout the pandemic economics has taken a back seat to protecting lives in most countries. Especially, the UK with its NHS worship and fast growing numbers of left-wing nutjobs, is particularly nervy - not that it saved us from being one of the worst affected places to date. 

But the economic numbers are brutal. Now we have £2 trillion in UK debt, albeit £745 billion is  QE debt which is owed by the Government to the Bank of England, which is sort of owns anyway. This equates to a 100% debt to GDP ratio last experienced in the aftermath of WW2 and economic catastrophe. 

Worse is that Government spending continues at £27 billion a month, already this year we have spent as much as we did in the whole of 2009 or 2010 - the height of the Financial Crisis and its costs. But is is only August and the furlough and money spending continues. 

All with an economy that is currently 20% smaller than it was, even if this bounces back in future months we will end up with an economy at least 5% smaller for the next few years. All those airlines and small retailers are not coming back quickly. 

There is no evidence that I can see that the Chancellor Rishi Sunak is going to apply the breaks, nor that the Prime Minister can awaken the country when all the talk is of second waves and a terrified populace. 

So by the end of next year, there is not way we won't have £2.2 trillion of debt - a 20% debt increase in the space of 18 months - unheralded outside of a major war. The only positives are thing slike furlough are easier to cut, but benefits for the unemployed will rush in to keep the Government spending. 

All that austerity and the political and personal costs of it has been wasted away by this new black swan event. the whole 2020's will repeat the 2010's in terms of economic exprience - little money for Governments to spend, creaking infrastructure and whining people asking for subsidies that don't exist.

There is a way to reduce this, which is to rapidly end government support that will force people and companies back to work - but there is no backbone in the government to do this and the ever present fear of a second wave stops this. 

Wuhan Holds Huge Concert Pool Party After Three Months Of No ...

I saw pictures of a huge gig in Wuhan this week, not much worry about a second wave there I note. 


23 comments:

John in Cheshire said...

Why isn't the government reducing the size of the Civil Service? Why aren't local authorities doing likewise?

In normal life, when an organisation is in financial difficulties, it reduces the size of its workforce, reduces wages, reduces things like pension contributions. So why aren't our servants treated the same? It's wrong that our servants have better employment terms then their paymasters.

Matt said...

@ John in Cheshire

Agreed - if the economy is 5-20% smaller then the civil service also needs to shrink to reflect (actually all government including the NHS). And benefits for those in work need to be reduced - gold plated pensions need to be addressed as part of this*

Instead, the public sector is agitating for increased wages as they did such a sterling jobs during the COVID-19 "crisis". All those empty wards and classrooms required heroes to man and Plod "taking the knee" for BLM while Antifa rioted was equally deserving.

* Yes, I know, the pensions have changed over the last 10-20 years but only to remove the real piss takes (pension based on final salary so you get a promotion in last year of work and fleece the taxpayer).

E-K said...

If this were a real plague I'd be the first to cover up or stay in.

It isn't.

They know it isn't. You can tell they know it isn't by the mish-mash of restrictions and the fact that no-one is telling us which standard of face mask we should be wearing.

We're being fucked over. And I'm no denier - I just have a good perspective on safety vs life threatening economic destruction.

The life you knew and loved before lockdown is over. It's never coming back.

YDG said...


"Government spending continues at £27 billion a month"

Should that be borrowing? £27 billion of spending per month doesn't seem that bad.

Anonymous said...

I've come to the conclusion that there isn't a problem in the world that governments cant make worse.
M.

Anonymous said...

@E-K
And ‘being fucked over’ ?

For what reason or are you just throwing out mumbo jumbo conspiracies?

You kinda have a valid point about the mask specification but the rest is just black helicopters

E-K said...

I don't believe in conspiracies but I do believe in opportunistic ratcheting by the Left.

They have this government in their grip and the longer this crisis goes on the better it is for them. The same applies to many western nations.

Sobers said...

The Covid crisis has shown that we are not governed by the people we vote into power, the democratically elected politicians, we are governed by the Left leaning mass of so called 'Public Servants'. Who take any opportunity they can get to stick the knife into their political opponents, regardless of the consequences for the public at large.

We no longer have a democracy, those whose decisions matter stay the same regardless of who we the people vote for. We have a self selecting permanent dictatorship of the Left. Its like the Borg. If one leftist civil servant is forced out for some reason, they'll be replaced by a clone with exactly the same ideological programming. Same goes for every other public position of power, from quango heads, to council CEOs, to chiefs of police.

BlokeInBrum said...

Guido Fawkes has on his front page the only chart that counts - the daily death rates from Covid over time.
It shows a rapid ramp up till the beginning of April, as the Government does its incompetent best to kill off all those vulnerable in care homes. Then a steady dwindling of numbers over time, irrespective of any and all actions taken to mitigate the effects of the disease.

Anonymous said...

Given the size of the debt, I can't understand why the EU are concerned about a level playing field. It's not as if we can afford to prop up zombie industries with state aid.

Or is there a different game going on.

Sort of reminds me of PE companies loading up their acquisitions with shed loads of debt, in the hope the CEO will sweat the workforce to pay it off.

jim said...

Why does this virus have an economic cost? Because we are all frightened of it. I am a bit windy, don't want to die. However journalists from the DT and DM do not seem so bothered. They and others are making out Covid is just a little flu thing - that we are all cissies for worrying about it.

We might fairly ask how many dead DT and DM journalists and bloggers are there? Are these people immune in some way - perhaps medical science can learn from them. Or are they well isolated and masked up and telling us we are all cissies from behind a laptop screen.

Now I think we all know that those telling us Covid is just a sniffle are talking bo**ocks. They are in the position of WW1 generals tucked safely behind the lines whilst ordering the cannon fodder over the top. These types are part of a propaganda effort to get us all back to work, making money and letting Dishy Rishy off his daily round of chucking money at us.

When Boris can drag himself back off his hols he can sit down and write his best Churchillian prose:-

"I can offer you nothing but illness, sickness and coffins.

But your country needs your sacrifices, but not mine or my mates'.

So get back in the classrooms teachers, breath in that Covid exhalation. You know it will do you good."

And so on and so on and so on.

Therein lies the rub. The cost is staggering, but the money is well worth it because it keeps Boris in power. The alternative is a few tens of thousands more dead spread over the next couple of years. A very bad electoral message. So forget the money, in reality it is a contribution to Conservative Party election funds. Not money wasted at all and it might keep me alive a bit longer.

Michael said...

I was surprised to hear the owner of 'Heaven' Nightclub on the R5 Live prog this morning, as his bills are rent of course, payments to staff, and all normal bills, but this week, he also had a huge bill from Westminster City Council.

I can understand landlords either helping or hindering, (he mentioned one who refuse to budge), but surely any council which relies on leisure trade could help out as well?

Usually, about a fifth of all poll tax goes to pensions and benefits to staff, so maybe they could try and rationalise those parts of the tax.

Also, the profligate Boroughs could bin their ridiculous 'green energy policies', and save a few quid there, as discussed with Nick the other day.

Elby the Beserk said...

On he matter of the civil service, which as with all large bureaucracies takes on a life of its own, and its sole purpose becomes protecting its own interests (as with the BBC, NHS etc. Indeed, old style Left command and central control still runs our lives, and we would not know we had a conservative government unless we were told so (we don't, of course)

This, however, is why Cummings is SO loathed. He knows the civil service hinders progress, and he wants to completely restructure it. He's maybe the only ray of light in the shambles we are witnessing - and that he terrifies the left can be seen from the insane reaction to his trip to the North East.

In Dom we trust. Boris. Oh dear.

E-K said...

Jim

Death by flu, cancer and many other diseases usually comes with death by suffocation. Horrible.

My Dad endured two years of bone cancer only to die of suffocation.

We are not *all* scared of this virus. Not any more scared that we should be of the above - which we are, incidentally, more likely to get because of lockdown.

Quite clearly CV19 is not the Black Death which took 25% of the London population over all age groups.

Like I said. Bodies would be lined up in temporary morgues and I'd be as fastidious about hygiene and shielding as anyone else.

"worth it for an extra few years of life"

Well - either you have the wrong figures about your risk profile or you won't be the one paying the bills.

And just as I said (because there are lots of people wearing masks all the time now) the life we knew and loved is never coming back and this is because of your attitude.

What use would you have been in the war ?

I have been accused here of being a conspiracy nutter (which I am not I simply understand the tireless energy that the Left is gifted) and could be dismissed as such were it not for the fact that the CV19 response aligns so perfectly with the Greenist, Leftist, Remainerist agenda - from cutting our roads down the middle to provide cycle lanes, to Corbynist splooging, to the nationalisation of railways, to BLM rioting and social restructuring, to daily all-day-long BBC terrify-cations, to NHS/Teaching Union aggression and the whole Leftist domination of our 80 seat majority (alleged) Tory Government.

I voted Boris and got Corbyn on speed.

Coincidence or Leftist opportunism ?

You keep safe now ;)

I've been working throughout lockdown - a lot of it spent in taxis (the worst thing you can do) no illness and I don't think I know anyone who's had CV19 much less anyone who's died of it.

I now know two people who have died prematurely because of lockdown though.



Anonymous said...

I'm definitely with EK and Sobers on this one. TPTB have done a super job in terrifying the population for nothing! I refuse to wear a mask on principle as it really is the last straw. They are useless anyway.

As EK says if this really were the plague or Ebola I would take it seriously but this hardly kills anyone. 2 people yeaterday.....the population is arounfd 60 million!! People die everyday anyway especially those who are old and/or sick. We've been made to lose all sense of proportion by the constant scaremongering. Most people hardly notice they've had it by all accounts. Those who are really ill usually have something else as well or like that Chinese doctor at the beginning in Wuhan got a very hefty dose.

I think I already had it and it was here in the UK way before anyone realised. Quite a few people I heard of had a flu-like illness last December or January but it wasn't quite the same as normal flu. Mine wasn't and I had a hacking cough. This was way before any lockdown or other precautions were introduced.

After that I haven't come across anyone who's had it let alone anyone who's died of it.

It was all too convenient for TPTB worldwide to impose draconian measures on their populations and unless we resist we won't get our freedoms back. I've been using cash throughout as well because that is another freedom they want to take away.

E-K said...

If you're under 65 and have no comorbidities and are scared of CV19 then you're a wanker in my book.

You're having everything taken off you like the baby you are.

E-K said...

PS

I didn't mean that.

(I don't want anybody wanking in my book - Marcus Aurelius Meditations at the moment. Not very stoic of me !)

jim said...

Thanks E-K.

Now I think HMG is doing as well as can be expected - for now. It dare not force people back too work in too open a way. Bad electorally and bad psychologically. Better to soft pedal for a while. Remember that whether we like it or not we have to keep our numbers in line with the EU or they will start making trouble.

Sure, an extra 20,000 deaths would be a drop in the ocean, completely insignificant - except for the trouble it would cause in 2024, the trouble it would cause jamming up the hospitals and the trouble it would cause getting everyone back to work and the trouble it would cause when the airlines and ports are locked down. So softly softly.

The gung-ho journalists are doing a good job pointing out the direction and the government can use then as 'useful fools' to keep a push in the right direction. They are part of the propaganda plan, a useful tool but nothing more.

As for cutting the civil service - a ridiculous idea - it is already too emasculated as are the local councils. Like an electrician chucking away their pliers when the lights go out. As the economic disaster unfolds we will need them if only to hand out the soup.

We do have a big problem though. Around 30% of the economy was flim-flam and is now gone and will take years to come back if ever. A further percentage will be lost as companies re-jig how they do business. No amount of petty economising is going to fix that problem. Some deep thinking about 'what is an economy'. Not as if throwing up a few factories will help much, we don't work cheap enough yet.

Unknown said...

Not only "What is an economy?" but "What is money?" and "What are taxes for?".

Times have changed since a Treasury was big wooden chests full of gold coins and jewels.

Don Cox



Elby the Beserk said...

Nobody is able to tell me how this pandemic differs to the many others that have passed in my lifetime.

At no point have I feared for my health. Assume I have good immunity to 'flu and such; not sure I have ever had real 'flu, rarely get a cold (aka "coronavirus"), and won't have the annual 'flu injection.

HK 'flu in 1969, for example. Was in full swing at the same time as Woodstock. 500K people in a field.

This has been handles so badly that the only plus I can take out of it is that Corbyn and co. weren't in charge.

FUBAR. Hate bloody masks. Can't see (glasses mist up) with them on. Take my glasses off then. Can't see (which is why I have glasses).

We need to breathe all over each other again.

jim said...

@Elby

This pandemic is different because we have the internet. Back in 1968/9 we had a flu epidemic and some 120,000 died. I was around and working then and don't remember a thing about it. Presumably the hospitals and funeral directors noticed but no one else. No big hoo-haa in the papers.

Now we all know the full picture globally. Governments cannot hide behind a slow paperwork system. So far the spin doctors have not managed to make this pandemic disappear. Therein lies the problem, if your system of government relies on professional liars and they can't think up a good lie - well they are not much use and you have a big problem. Which is where we are now.

E-K said...

Thanks for taking it in such good spirit, Jim. (A man after my own heart.)

https://www.express.co.uk/comment/columnists/frederick-forsyth/1298046/coronavirus-fear-UK-britain-death-toll

Freddie puts it more intelligently than I do.

CityUnslicker said...

OK, so some would have us liek Brazil - pretend there is no problem and then whoops.

However, one day the panic will be over. It maybe now, we will know in 8 weeks if there is a Winter surge or not. Waiting for years is madness, like New Zealand cast adrift as in a world where no one dies.

I put the picture of Wuhan in for that reason, rationally, they are all immune now as so many had it and died - which is sad. But not reason for them all to hide now and forever more.