Wednesday, 28 January 2009

New debt will take 20 years to pay back

The Institute for Fiscal Studies (generally considered a neutral think-tank) has calculated that the new debt being created to cope with the current recession will take twenty years to pay back. Young people just starting their careers today will spend half their working lives being taxed to pay for this government's ineptitude; an extra £20bn a year in tax yield will be required.

Of course Gordon Brown hasn't stopped throwing money around. Every day seems to bring a new dispensation. Yesterday he flung £2.3bn at the automobile industry. And, I for one, don't believe he has the self-discipline to start debt repayment anytime soon so that 20 years could easily balloon to 50 or more.

In fact I don't think Gordon has any plans to behave responsibly. Why should he? He'll be booted from office in under two years. I think he is happy to let his successors carry the can.


Perhaps now is the right time to introduce the word "depression". What is a depression? Economists don't have a precise definition. A recession is two consecutive quarters of GDP shrinkage; and the consensus seems to be that once you've been in recession for 3 years - it's a depression.

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