Monday, 12 October 2009

UK debt and Gordon Brown's legacy

Gordon Brown used to love talking about economic prudence. He certainly did, but at the same time as the UK was having record tax receipts income, he was still borrowing. We all know the old adage that in the good times you save for a rainy day. Unfortunately Gordon spent, spent, spent, during the good times and then borrowed some more as well.

Whilst he claimed to be in charge of the economy and doing a good job during the good times, he says it's all someone else's fault during the bad times. Looking at the graph above - JP Morgan data, based on IMF estimates, of the cost of the banking crisis not in billions, but as a percentage of GDP, it's clear we're far worse off than either the US or the Euro area and both France and Germany are already out of recession.

We're going to be paying this back for a long, long time and even worse, when GB's money printing (QE) finally breaks through, we're going to have real inflation problems and those mortgages are going to get really expensive.

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