Tuesday, February 24, 2015

George Osborne has created more debt than every Labour government in history!


Over the years I've presented a lot of facts and statistics to demonstrate that George Osborne has been doing a terrible job as Chancellor of the Exchequer, and that his ideological austerity agenda is spectacularly failing to achieve what he claimed it was going to when he came to power in 2010.

One of the main problems I've faced is that the facts and statistics I've presented contradict the almost ubiquitous mainstream media narratives that "George Osborne is doing a good job under difficult circumstances" and that "there is no alternative" to his ideological austerity agenda.

People find it difficult to accept the evidence that I'm presenting because it conflicts so badly with the narratives they've been conditioned to accept as true through their endless repetition in the mainstream media.

One of the assertions that people really struggle to accept is that George Osborne has created more new debt than every Labour government in history combined. This one is particularly hard for people to come to terms with because it conflicts with the (totally inaccurate) "folk wisdom" that "Labour always spend loads of money, then the Tories have to tidy up the mess". Further confusion is added by the way that Tory politicians (including the Prime Minister David Cameron) try to conflate the meanings of "the debt" and "the deficit" which are economic terms with completely different meanings.

George Osborne has created more debt than every Labour government in history


A quick look at the economic evidence reveals that only two Labour governments have ever left office leaving the national debt higher as a percentage of GDP than it was when they came to power, and all of the others have lowered it as a percentage of GDP.

On the two occasions that Labour oversaw increases in the national debt as a percentage of GDP there were the mitigating circumstances of huge global financial crises. The Ramsay MacDonald government of 1929-31 coincided with global fallout from the Wall Street Crash (they left a 12% increase in the debt to GDP ratio), and the last few years of the Blair-Brown government of 1997-2010 coincided with the 2008 financial sector insolvency crisis (they left an 11% increase). The other Labour governments all reduced the scale of the national debt, Clement Attlee's government of 1945-51 reduced the national debt by 40% of GDP despite having to rebuild the UK economy from the ruins of the Second World War; Harold Wilson's 1964-70 government reduced the national debt by 27% of GDP; and even the Wilson-Callaghan government of 1974-79 managed to reduce the debt by 4% of GDP.

The majority of Labour governments have ended up reducing the national debt, and the two that didn't happened to coincide with the biggest global financial crisis of the 20th Century and the biggest global financial crisis so far in the 21st Century.

When we come to look at George Osborne's own record as Chancellor of the Exchequer it is an established fact that in his first 3 years as Chancellor, Osborne managed to add more to the national debt than the Labour Party did in the 13 preceding years.

By George Osborne's own estimates, the national debt will have grown by 26.9% of GDP between 2010 and 2015. If you want to check this for yourself, have a look at page 19 of the November 2010 OBR Economic and Fiscal Outlook which records the debt to GDP ratio as 53.5% of GDP for 2009-10, and page 20 of the December 2014 OBR Economic and Fiscal Outlook which records the debt to GDP ratio for 2014-15 as being 80.4%.

In the last 200 years of economic history there have only been three prolonged periods of debt accumulation worse than George Osborne's tenure as Chancellor of the Exchequer: The First World War (+110% of GDP), the Second World War (+100% of GDP) and the tenure of Tory Chancellor Nicholas Vansittart 1812-1823 (+64% of GDP).
Having increased public sector debt by 26.9% in five years, George Osborne has undeniably created more new debt than any single Labour government in history ever has. In fact it's a bigger proportional increase in the national debt than all of the Labour governments in history combined.

Disclaimer

The reason I've written this article is not that I support the Labour Party. Anyone who is familiar with my work knows that I'm not a Labour Party loyalist, and anyone who isn't familiar with my work can read this, this and this to establish that I'm no blind Labour Party tribalist.

The reason I've written it is that I believe that George Osborne is such a poor Chancellor that he makes Gordon Brown's tenure look highly competent in comparison!

It's absolutely incredible that George Osborne has the chutzpah to carry on churning out the "irresponsible Labour" narratives when his ideological austerity agenda has failed so spectacularly in its own terms, meaning that in just five years he's ended up creating more debt than every Labour government in history combined!


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