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Busting the single narrative

Busting the single narrative. The debt crisis as just another story – or Why are we prey to a single narrative?. This was ON Andrew Marr’s show……. “We were on the brink of bankruptcy…”. “You clearly need to make the savings, the cuts and raise taxes...”.

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Busting the single narrative

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  1. Busting the single narrative The debt crisis as just another story – or Why are we prey to a single narrative?

  2. This was ON Andrew Marr’s show…… “We were on the brink of bankruptcy…” “You clearly need to make the savings, the cuts and raise taxes...”

  3. “The Chancellor has exaggerated the sovereign risks that are threatening the country.” Professor Christopher Pissarides, Nobel Prize for Economics in 2010, Daily Mirror 09.01.11 "I think it is likely that the economic downturn will last far longer and human suffering will be all the greater." Professor Joseph Stiglitz, Nobel Prize For Economics In 2001, Daily Telegraph 08.09.10 “The best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997.” Professor Paul Krugman, Nobel Prize for Economics in 2008, New York Times 21.10.10

  4. You can only understand how BIG debt of GDP is when you compare it as a percentage

  5. But what is GDP? The GDP for 2010 is…… £1.435 trillion GDP = Consumer spending + Business Investment + Government Spending + International Trade income

  6. “Our debt is higher than it’s ever been…” (Coalition Government) National debt

  7. ...The Maastricht Treaty EU limit on debt 60% of GDP

  8. Our Current debt – GDP ratio 64.6%

  9. IF YOU DEDUCT WHAT WE GAVE BANKS, debt is EVEN LOWER • UK net debt is £952 bn • Excluding Financial sector intervention, debt is £845 bn* • Or 57.1%of GDP! • Source: Office National Statistics (November 2010) *This includes £100bn+ of the banks’ debts that is now UK Government debt

  10. Our debt is historically low

  11. ....our debt is low compared to the rest of the world UK 65% CANADA 81% GERMANY 72% FRANCE 77% USA 95% ITALY 119% PORTUGAL 87% GREECE187% SPAIN 70% JAPAN 200% Source: CIA Factbook Source: CIA World Factbook

  12. “The Deficit is caused by overspending…” (Coalition Government) The deficit

  13. THERE ARE 2 SIDE TO deficit INCOME Mainly taxes • SPENDING • Public services • Investment • Debt payments Government Is spending too high or income too low?

  14. Growth and deficit are linked

  15. There is a tax deficit • The UK TAX take 1995-2010 • Without the recession tax revenues should have been £100bn more than today.

  16. GROWTH reduced the deficit Oct 2009 to March 2010 Deficit £165bn £22bn £145bn Growth 1.5%

  17. “Interest repayments are higher than ever…” (Coalition Government) The deficit

  18. GOVERNMENTS ALWAYS BORROW Conservative Government Source: Public Finances Databank, ONS

  19. Our Borrowing is cheap, mainly from the UK and can be repaid over 13-15 years So why pay off the deficit over 4 years?

  20. SERVICING THE DEBT…. • The Thatcher government paid the equivalent of £174mper day www.ukpublicspending.co.uk Thatcher Government

  21. “We have to make cuts…” (Coalition Government) The deficit

  22. LEVY TAX….. Is THIS where the deficit is?? We don’t pay enough in tax to cover what we spend. Source - Eurostatnewsrelease – June 22nd 2009

  23. SINCE 1975 we have replaced direct with indirect taxes… High tax rate

  24. The UK is now one of the MOST UNEQUAL societies in the OECD THE GINI CO-EFFICIENT – UN MEASURE OF INEQUALITY Inequality

  25. “What really caused the deficit?” The deficit

  26. Let’s not forget who’s to blame… “…although the causes of the crisis may have been rooted in the financial sector, the consequences are affecting everyone, and will continue to do so for years to come.” (Mervyn King’s Address to the TUC conference – 15.09.10)

  27. how the banks affect our gdp….. Increasing or reducing the supply of money into the economy through household and business lending artificiallyinflates or deflates our GDP – i.e. Banks manipulate the flow and quantity of money EXAMPLE: in the 2000s banks pumped between £10-14bn into the economy every year through housing equity withdrawal . Since 2009, banks are refusing to lend and have sucked £15bn out of the economy per year (Source of statistics: Bank of England)

  28. Growing influence of finance The contribution of sectors as a % of GDP

  29. Re-Balancing the economy No Yes

  30. So do we need cuts? • Debt is low compared to our history and partner nations • Growth plays a key role in reducing the deficit • If tax is lagging behind spending, why not borrow short term to encourage growth? • What would 3% per year growth for 5 years do to the deficit?

  31. SO What is this a crisis of? • National debt? NO • Current account deficit? Depends on your values - it’s political • Economic governance? YES • Employment? YES • Banking? YES • Democracy and public debate? YES

  32. OUR SOCIETY IS MORE THAN OUR ECONOMY! “The gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials.” Robert Kennedy, 1968

  33. Economyths: prepared by Barry Kushner barry@blueurbansky.com Saville Kushner savillekushner@hotmail.co.uk

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