In Brown’s debt | 1 July 2009

In the FT, John Kay has written one of those columns that quietly sums up the calamitous cost of Brown/Balls fiscal model. He concludes that we’ll have to raise some £70bn of taxes and then inflate our way out of debt—and this is a theme worth looking at in greater detail because I suspect it is what George Osborne will end up doing.  “This year, Britain is likely to incur a fiscal deficit of more than 12 per cent of national income,” Kay starts. “This figure is completely outside the normal experience of developed countries in peacetime. How did it happen and what are its implications?” How it happened is that Brown and Balls used their verbal tricks to conceal their reckless leveraging up of the British economy. “The British government, ostensibly committed to this principle [of running surplus in the good times], has obfuscated to abuse it so that Britain entered the recession with a large underlying deficit.