According to David Cameron, deficit reduction is the “guiding task” of the coalition, so it’s unfortunate that he’s not very good at it. The latest figures from the ONS show that his government borrowed £17.9bn in May, £2.7bn more than a year ago. Worse, the total deficit for 2011-12 has been revised up by £3.2bn to £127.6bn, and the national debt is now £1.0134 trillion (65% of GDP), a stat that will terrify the fiscal conservatives in Osborne’s party.
In his “emergency Budget” in 2010, Osborne claimed that “unless we deal with our debts there will be no growth”. But as all Keynesians know, the reverse is true. Unless you stimulate growth, you can’t deal with your debts. With the economy back in recession, income tax receipts are down 7 per cent on May 2011.
The Chancellor once hoped to go to the election boasting that he had “balanced the books” and cleaned up “the mess” left by Labour. Now, with 2015 borrowing likely to exceed even the OBR’s recent forecast of £75bn (4.3 per cent), the question voters will ask is “what was all the pain for?”
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