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Harringay, Haringey - So Good they Spelt it Twice!

I saw a brief article on the BBC News web site earlier about the UK's National Debt. Now, I know this can be a bit dull, but we have accepted words like 'austerity', 'deficit' and 'national debt' into our collective lexicon over the last 5-8 years and I doubt anyone really understands them such that they can make an informed choice (what with Labour promising to cut one type of deficit, and the Conservatives to cut another type of deficit). I do not.

Apparently our national debt stands at £1.4trillion, and this went up sharply during the financial crisis as insolvent banks were propped up and money supply secured when inter-bank lending came pretty much to a halt. Apparently we need to save £30bn, but this seems like a drop in the ocean?

I know I am dull, but I would love to actually know:

  1. What is our national debt
  2. How big is it
  3. Where has it come from and when (ie, WWI/WWII/Banking Crisis etc)
  4. What the different types of deficit are
  5. Who is proposing what on the various deficits
  6. Why £30bn of saving is the amount we have to save from our national spending...

One for Evan Davis?

Does anyone have a relatively unbiased (on a party political basis) explanation that might make me make an informed choice on May 7th?

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You'll get really interesting answers to questions like that if you go to the house price forum on money saving expert. You need to be a member to see that thread. Loads of neo liberals mind you who seem to treat national debt as the same as house hold debt but worth poking around.

1.  The United Kingdom National Debt is the total quantity of money borrowed by the Government of the United Kingdom at any one time through the issue of securities by the British Treasury and other government agencies.

2.  £1.4 trillion

3.  National debt has existed since the time of William III - used by various governments to pay for various schemes including of course war.  WW1 and WW2 obviously contributed but so have wars before and after.  

4.  Deficit, specifically, budget deficit is how much the debt is increasing each year.  Currently approx. £100 billion I believe.  When the current government talk about reducing the structural deficit by 17/18 they are referring to getting rid of the budget deficit so national debt start to decrease.

5.  Good luck with that explained.  Best bet is to read the IFS website who can explain it.  Or see this article on bbc: http://www.bbc.co.uk/news/election-2015-32424739

6.  During the last government, they were hoping to make savings of £20 billion per year to continue to decrease the budget deficit.  They have done that in part, but there is still a long way to go.

Good luck with your decision but ultimately regardless of the government in power, I would imagine they will all be making cuts because the current budget deficit isn't sustainable!

Thanks, I saw the BBC article.

So what is it Labour keep on about, the current deficit? How does that differ from the structural deficit?

Not sure I know what Labour literature you are referring too so can't comment but I would imagine they refer to the same thing.  All the parties use the numbers and words to elaborate their point...  As an example, national debt has increased, the deficit decreased (but not as fast they wanted) but national debt as a % of GDP has decreased.

They'll use what ever language suits them to justify their views.

Thanks for raising this question, interesting.

Inflation I get Billy, but it is not as simple as you think it is. You introduced the term Structural Deficit- thisis the deficit the Tories talk about, Labour on the other hand talk about the Current Deficit (do I have that right?). How are they different?

£30bn, yes sounds like a big saving, but is it over a 5 year parliament, every year, is it a cut of spending or reduction in debt via a pay down of our debt?

As to the question of what does our debt look like. We have a large national debt:GDP ratio, but how much of this debt is backed by potential assets- such as ownership in banks or lending to banks to bail them out and bad loans we may have absorbed from these banks (some of which will pay back over time as not all will fail). The question here is how much is debt that cannot be paid back through ultimately realising these 'investments'...? So, how much is real debt that has to be paid back, and how much is debt that we should see paid back as the banks stabilise?

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