Let’s take a few numbers:
- Bank of England base rate: 0.5 per cent
- Annual interest on the national debt: £49billion
- Armed Forces spending: £35billion
Although interest rates are at the lowest point for 5,000 years with a base rate of 0.5 per cent, we spend more each year on interest payments than on defence.
So-called austerity is nothing of the kind. Our debt increases each year by an astounding £73billion.
When the government talks about reducing the deficit, it is not talking about what most people think of as reducing debt, ie paying it off and decreasing the amount outstanding. Instead, this government is talking about reducing the ‘rate of the increase’.
If I have a mortgage of £500,000 and I am increasing it by £30,000 a year because I am overspending and cannot live within my means, in year 2, I owe £530,000 and in year 3, £560,000. If I increase my mortgage by £20,000 a year rather than £30,000 a year I am still living beyond my means and my debt is still growing. The government tells us that slowing the growth of our debt is a victory, as if it had reduced the debt! Can you imagine your mortgage lender putting up with this kind of plan?