The true cost of the coronavirus debt

There is a view that we don’t have to worry about the record debt the government has accumulated since coronavirus laid waste to our way of life and our economy. And in two senses I would half agree – though the other half of me is wracked with anxiety. 

First, this is not a uniquely British problem; it is a problem of all developed economies.

However, you should not underestimate the geopolitical significance of the explosion of debt in the rich West, because it represents by implication the fastest transfer of wealth and power to China and Asia in our lifetimes. 

Second, there is the important counterfactual – namely what would have happened if the government had not borrowed and spent all that cash. Which does not bear thinking about. 

All that said, it will be a huge moment on Wednesday when the Office for Budget Responsibility confirms that the UK is on course to borrow around £400 billion this year, equivalent to around 20 per cent of national income, and that the national debt will rise to well over 100 per cent of that same national income.