Debt, Debt and More Debt
Unsurprisingly this weekend we were greeted with the news that the National Debt has now passed the £500bn mark. In a “miracle” economy whose foundations are built entirely upon debt, debt and more debt, the news that the country owes more money than ever before can hardly come as a shock to anyone. Gordon has slowly but surely sunk us further and further into the mire, and it’s now anyone’s guess as to whether the house of cards can be supported long enough for him to make the switch nextdoor.
One of the gigantic pits in which our money appears to be gathering is the coffers of various Private Finance Initiative companies, who are seeing profits beyond their wildest dreams, just so Gordon can keep a bit of the countries mammoth debts off his balance-sheet.
One of the more recent symptoms of the whole spiral of debt beginning to unravel seems to have been the fact that even the grossly fudged CPI measure of inflation is hitting new heights, with the Office for National Statistics unable to tweak it any further to cover up the truth. This amazingly seems to have also taken people by surprise, but it appears the cat is firmly out of the bag on inflation now as traders in the City are betting that two more rate hikes will be needed to follow January’s “shock” rise, both likely to be before the summer. But for rates to hit 5.75% could yet prove relatively benign in comparison to the starker alternatives that the Bank of England may be forced into.
The Telegraph continues to admirably stick the knife into Gordon, their Sunday economics editor commenting that “Britain is heading for trouble - and it’s all Mr Brown’s fault”:
Could Britain get caught in a “wage-price spiral? Could our high-performance economy, “the most successful in the Western world” as Gordon Brown likes to tell us, get sucked into the kind of inflationary problems that did so much harm in the 1970s?
It is a horrifying prospect and, in the wake of last week’s price data showing the most important inflation index at a 15-year high, increasing numbers of analysts think such a disaster could happen.
So, in the coming months, as the interest rate rises bite and debt-soaked shoppers scream, the mood in the country will turn against Mr Brown. Of most immediate concern is last week’s news on inflation, and the related danger of a wage-price tailspin. But that is only the latest sign that Britain’s strong economy could soon go into reverse.
Were that to happen, millions of households and businesses would see a swing in their financial fortunes, just as Mr Brown moves into Number 10. His reputation for sound economic management, the centrepiece of his claim to the premiership, would be flushed away for good.
The supreme irony is that come early summer, just at the moment when he achieves his ultimate ambition, the fates have decreed that a toxic combination of rising interest rates, rising inflation, rising taxes and rising industrial discontent will rain on his coronation parade.
