Update: Corrected the link to the ONS data.
A lot of commentary regarding Britain’s economy focuses on the huge debts that the government have built up and the effects of the “credit-crunch” and recent recession. When considering this issue, it is worth remembering that Gordon Brown, as chancellor, built up large debts prior to the credit crunch. Using figures taken from a recent bulletin from the Office for National Statistics (see page 15), Britain’s debt going back to 2001 was:
|Year||Debt (£ billions)||Debt (% GDP)|
Thus we can see that by 2007, the year that Northern Rock ran into trouble, the government had increased the national debt from 30.9% of GDP in 2001, to 44.2% of GDP. This during a period when the economy and tax receipts were both growing.
The government was constantly spending more than it was receiving in taxes from 2002 onwards.
As a result of the credit-crunch and resulting recession, we’ve seen the debt shoot up to 61.4% of GDP since 2007. Had Brown balanced the budget in the years 2002 to 2007, the debt would have been over 13% of GDP lower when trouble hit, and the government would have had more room for maneouvre, probably resulting in a less severe recession as a result.