[Osem]

Originally Posted by Chris

The figures for the 90s are the result of our disastrous experiment with the European Exchange Rate Mechanism, fore-runner of the Euro and, to this day, the reason why we're neither in the Euro nor planning ever to be in the Euro. Exiting the ERM and getting the economy back on track was necessary but painful, but you can see from the trajectory of the deficit from 1993 onwards that Kenneth Clarke's management of the economy turned things round quickly. The swing from deficit to surplus continued through 1997, when Labour came to power, and continued for as long as Labour maintained its election pledge to stick with Tory spending plans. Once Brown started doing something else, of course, we were on our way to hell in a handcart.

Keynsian economics, which our leftie friends supposedly espouse, demands that you run a budget surplus in the good times in order to fund stimulus spending in the bad times. In the bad times, you spend your savings and, if necessary, run up a deficit by commissioning capital projects - new roads and railways, for example - which helps to keep the economy moving and provides stimulus for recovery.

Unfortunately Gordon Brown chose to run us into a deficit in the middle of a boom, all the while excusing his rash illl-judgment by claiming to have "ended the cycle of boom and bust" - remember that rhetoric? - naturally expecting everyone to believe that if there was never going to be another bust, it was less important to run a surplus during the boom which would allow us to salt away funds to combat the next recession.

Even more unfortunately, Brown's "boom" was fuelled by an all but uncontrolled Credit bubble which could never have been sustained. And worse again, Brown wasn't even running up a deficit on investments in infrastructure that could make the country more resilient in the event of a future recession. No. Gordon Brown spent all that money on expanding the public sector wage bill and on a massive extension of the welfare state, dishing out benefits including the child trust fund, which was even given to the richest families in the land, and child tax credits, likewise given in some measure even to the comparatively well off.

Gordon Brown has created a society in which almost everybody has a sense of entitlement to state largesse and an economy that lacks the resilience to generate the cash to pay for it.

That's what that graph tells you.

To such an extent that, even now, with the stark writing clearly on the wall, they continue to delude themselves that you can carry on spending what you don't have ad inifinitum. It'd be funny if it wasn't so dangerous.