Last week’s public-finance statistics were truly dreadful. They showed that despite a year of fairly robust economic growth, UK government borrowing since the start of the financial year 2014 to 2015 was actually 10 per cent higher than in the same period in 2013 to 2014. Once again, it seems, our public finances will be in deficit by more than £100 billion this year.
Running sustained deficits of this kind adds to the overall debt burden. According to the new ONS figures, public-sector net debt is currently £1.45 trillion (79.9 per cent of GDP) – meaning we are paying just over £50 billion per year in debt-interest payments. Whilst debt levels on this scale are not unprecedented historically, accumulating such large levels of debt during peacetime is more or less unknown.
The long-term challenge of keeping debts at a sustainable level is greater still. The debt figures we hear quoted in the media are backward-looking.
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