Stamp Duty

[inbetween]

Still no idea why you talk about the 20th century.

Sticking to the 21st century, just explain for me why our national debt went massively up between 2010 and Covid, while Germany's fell by a similar amount.

Because Germany doesn't borrow massively to spend because it isn't allowed to. They have fiscal rules written in law which mean they can only issue a specific level of government debt. If they want to spend then they have to find the money from elsewhere.

The UK meanwhile has recorded budgetary deficits every single year for the last 25 years. Much of this deficit is financed by borrowing as opposed to taxes or savings they've found elsewhere.

10% of the UK government budget is now just debt interest. If we ran a fiscal debt rule similar to Germany and as a consequence held a similar level of debt to Germany then we'd free up around £50-60bn for public spending.

 

[Mr Kobayashi]

Because Germany doesn't borrow massively to spend because it isn't allowed to. They have fiscal rules written in law which mean they can only issue a specific level of government debt. If they want to spend then they have to find the money from elsewhere.

The UK meanwhile has recorded budgetary deficits every single year for the last 25 years. Much of this deficit is financed by borrowing as opposed to taxes or savings they've found elsewhere.

10% of the UK government budget is now just debt interest. If we ran a fiscal debt rule similar to Germany and as a consequence held a similar level of debt to Germany then we'd free up around £50-60bn for public spending.

That doesn't explain the fall though does it.

One country has at least a semi-coherent plan for industry and infrastructure, and the other doesn't.

 

[Vic]

There's no mention of the 20th century in the post you quoted. Maybe I posted 20th instead of 21st by mistake earlier? Dunno, don't care. You clearly knew what I meant.

Ask Len Rum ;-)

Seriously, I am sure you DO understand the difference between debt and deficit? Cameron inherited from Brown, a budget deficit of around (IIRC) £150bn per year, i.e. every year, the national debt was increasing by £150bn. That is a supertanker you cannot just stop on a sixpence. The Tories set about making cuts to public spending in order to slow the supertanker and decrease the rate at which the debt was increasing year on year. But obviously until the deficit is zero, the debt always increases.

With a debt of say £1Trillion and deficit of say £150bn on day1 (i.e. the government spending £3bn PER WEEK more than they take in) then how on earth can the debt NOT be more than £1Trillion, 1 year later? Did you advocate even greater austerity, to get the deficit down quicker? I doubt that.

And had they NOT made the cuts, then the debt would have risen even faster and higher, obviously. Now we can discuss whether austerity went on too long, but that's really a separate debate.

Now, as to why Germany did better?

Their economy is not so Financial Services oriented, so their bank bailouts were not as horrendous as ours and
they went into 2010 running a budget SURPLUS not a deficit, so of course that meant their debt was falling. Different economies have different dynamics, of course. And now, with its huge automotive sector, the German economy is in trouble with massive businesses like Bosch losing money, whereas ours is not so much. Swings and roundabouts.

View attachment 99781

Clearly I had no idea that you'd got the century wrong. Don't blame me for that.

And I'd have thought a financial wizard like you would have known about Germany's "debt brake", and the ways round it that the German courts have just said is unlawful.

And "And had they NOT made the cuts, then the debt would have risen even faster and higher" is not at all obvious.

 

[metalblue]

That doesn't explain the fall though does it.

One country has at least a semi-coherent plan for industry and infrastructure, and the other doesn't.

Germany has a much higher tax take than UK. If UK charged equivalent German tax levels the treasury would get ~£50bn a year extra. And we will still lag Germany by 2027 but will be nearer (assuming they don’t increase taxes in meantime).

That’s the problem with country comparisons - there are always many reasons for differences.

 

[Chippy_boy]

Clearly I had no idea that you'd got the century wrong. Don't blame me for that.

I'm not blaming you for anything. I merely said your comment about me keep banging on about the 20th century was a bit weird, given you quoted my post that didn't mention the 20th century!!! Anyway, clearly you knew what I meant. If you want to be a jerk and make a big deal over it, knock yourself out.

And "And had they NOT made the cuts, then the debt would have risen even faster and higher" is not at all obvious.

Year 1
Debt = £100
Deficit = £10

Year 2
Debt = £110

VS

Year 1
Debt = £100
Deficit = £15

Year 2
Debt = £115

Yep, that's pretty obvious.

 

[metalblue]

I don’t see the problem with stamp duty.

You pay it when you buy a house. You then “reclaim” it when you sell that house from the sale price. You don’t (usually) pay CGT on your main house when you sell it so it’s really just moving money during your life time until you downsize.

That strikes me as fair.

 

[inbetween]

That doesn't explain the fall though does it.

One country has at least a semi-coherent plan for industry and infrastructure, and the other doesn't.

We are two completely different economies so it makes a lot of sense that the end results would be completely different. You however only have to travel a mile from Germany into France and the debt burden is worse than ours. So yes the planning around spending decisions and that kind of thing is at fault but we're not unique in that.

Personally I'm not attacking the debt itself, I'm attacking our policy to load up on debt to spend money on the wrong things. If we borrowed to invest in education then brilliant that would make a difference but we don't do that. HS2 is the best example of spending policy gone wrong, it is extremely expensive and extremely limited in what it will achieve.

The cost of these decisions means that important spending decisions on actual useful projects are lost because we can't borrow more to pay for those too. Those projects however would make a difference and they would even be a lot cheaper but we suffer because of the burden of other shambolic spending decisions.

The tax burden has never been greater and we've still never spent so much yet amazingly we get so little back.

 

[Chippy_boy]

Because Germany doesn't borrow massively to spend because it isn't allowed to. They have fiscal rules written in law which mean they can only issue a specific level of government debt. If they want to spend then they have to find the money from elsewhere.

Fine Conservative principles. I like that.

The UK meanwhile has recorded budgetary deficits every single year for the last 25 years. Much of this deficit is financed by borrowing as opposed to taxes or savings they've found elsewhere.

10% of the UK government budget is now just debt interest. If we ran a fiscal debt rule similar to Germany and as a consequence held a similar level of debt to Germany then we'd free up around £50-60bn for public spending.

Wouldn't that be marvellous.

The rather small fly in your ointment is that you fund a given level of public spending by tax receipts and borrowing. If you cannot increase borrowing (i.e. debt) then you have 2 choices - either cut spending or increase taxes.

I do not remember much enthusiasm for tax increases back in 2010 - or in 2023 for that matter. Sure, their might be those in favour of tax increases on "other people, so long as it doesn't impact me". But that's unrealistic. Significant tax increases place additional burden on most people, necessarily. So inevitably, reducing the deficit had to be done by slowing public spending and tax increases via things like freezing allowances. That's what the Tories did.

The buffoons banging on about "needless austerity" - would have just seen the debt go much higher, which as you say, would never even be allowed in Germany.

 

[Mr Kobayashi]

Germany has a much higher tax take than UK. If UK charged equivalent German tax levels the treasury would get ~£50bn a year extra. And we will still lag Germany by 2027 but will be nearer (assuming they don’t increase taxes in meantime).

That’s the problem with country comparisons - there are always many reasons for differences.

Sounds like we should increase taxes then. Not give huge tax breaks to millionaires buying million pound houses. :)

 

[Chippy_boy]

That doesn't explain the fall though does it.

One country has at least a semi-coherent plan for industry and infrastructure, and the other doesn't.

I think a bigger issue is one country doesn't have diabolical productivity levels through MANY decades of short-termism and under-investment.