A rare slip of the tongue by Ed Conway

I have great respect for Ed Conway, until recently Economics Editor of the Telegraph, who certainly knows a great deal more about economics than I do.  Nonetheless, I believe I may have spotted a rare solecism in his piece for the Sunday Telegraph last weekend (Aug 21st). 

He says “Whichever way you look at it, Britain is enormously over-leveraged — and although we are gradually paying off that debt, its scale is so great that the experience will be a long and drawn-out one”.  Admittedly, these are not his own words.  He is, he says, quoting Andy Haldane, the impressively-titled Bank of England’s Executive Director for Financial Stability.  But he quotes him with approval, and apparently with agreement.

Of course the first statement is beyond question.  Britain is indeed over-leveraged.  But the second — “we are actually paying off that debt” — is not.  George Osborne has adopted (thank heaven) a fiscal consolidation plan designed, over the life of a full parliament, progressively to bring down the annual deficit.  And the dispute with Ed Balls is not about whether this needs to be done — which is agreed by all — but whether we should do it as quickly as Osborne plans.  Yet Osborne’s plan is not very quick — it will only bring the annual deficit down close to zero by the end of this parliament.

There will therefore be a large (but hopefully declining) annual deficit every year of this parliament.  So we are not “paying off the debt”.  We are, in fact, increasing it until 2015.  Market confidence in UK sovereign debt has been restored, not because we are paying off the debt, but because we have a credible plan to increase it more slowly.

Too many people in politics seem to believe that the austerity plan forced on us by the dreadful legacy of the Brown Terror is enabling us to pay down debt.  It is not.  It is merely enabling us to grow it more slowly.

Sooner or later, of course, it is important that we should indeed start to pay down the debt.  But we can only achieve that when we achieve an annual surplus — not an annual deficit.  And that looks like a job for the 2015/20 parliament.  Look forward to a decade of austerity.

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5 Responses to A rare slip of the tongue by Ed Conway

  1. Thanks, Roger.

    There are more questions than answers now.

    Did social engineers – following the 1962 Cuban Missile Crisis – use Eisenhower’s warning (17 Jan 1961) on the danger of a “scientific-technological elite” to design the “scientific-technological elite” that tried to:

    a.) Control the population of China (1965-1968)
    http://www.historylearningsite.co.uk/cultural_revolution.htm

    b.) Define H-fusion as Earth’s heat source (1967-1968)
    O. Gingerich, C. De Jager, “The Bilderberg solar model”
    http://adsabs.harvard.edu/full/1968SoPh….3….5G

    c.) Identify CO2 as a dangerous air pollutant?
    US DoE contract with Phil Jones DE-AC02-79EV10098

    Click to access 20110722_Climategate_Roots.pdf

    I know the rest mass of every nucleus with two or more neutrons is increased by neutron repulsion – the greatest known source of nuclear energy [1].

    But I do not know why the US Department of Energy (DoE) has not confirmed or denied that observational fact [1], but instead sent public funds to Phil Jones to misidentify CO2 as a dangerous air pollutant?

    1. “Neutron repulsion confirmed as energy source”, Journal of Fusion Energy 20, 197-201 (2001):

    http://www.springerlink.com/content/x1n87370x6685079/

    Oiver K. Manuel
    omatumr2@gmail.com

  2. Mike Spilligan says:

    What a pity that the 2015 government will either be Labour or a Lab-Lib coalition.
    I would only be repeating what others are continually saying, here and elsewhere, by listing all the failures to meet pledges by the Conservatives, as well as U-turns; not many of which are being forced by a Lib-Dem tail wagging the Tory dog.
    Cameron is a PR specialist, yet the view on the street on (as one example) tabloid hacking is that “it’s Cameron’s fault”. The public in general misunderstand what they read, misidentify people and forget dates. There may yet be time for Cameron to do a better job, but there soon comes a time when an impression becomes ingrained.

  3. You’re right, Mike, that we have some presentational issues. We have some substantive ones, too, I’m afraid.

  4. Peter Hulme Cross says:

    A very concise explanation, Roger, and absolutely right.
    It’s simple enough, but for some reason even intelligent people find this difficult to grasp.

    As for austerity….that will not be enough on its own. We need the economy to grow. Growth is essential. But for growth to take place, we need confidence in the business community, and that means policies that are business friendly.

    Unfortunately this government does not appear to be business friendly. Osborne’s raid on North Sea energy companies resulted in projects being cut back. Increasing VAT is not a recipe for growth. Bombardier in Derby lost a huge contract to Siemens of Germany – now don’t tell me nothing could be done, I’ve heard all the weak excuses.

    We have an Energy Policy that will make energy more expensive, thus undermining our whole economy. And we have allowed the EU to regulate the City of London. There is now talk of a tax on financial transactions (a Tobin tax) which will hit the UK disproportionately hard. Cameron and Osborne will of course talk tough but what’s the betting they will allow it through when ‘push comes to shove’ just like they have with everything else from the EU.

    For examples of growing economies we need only look to Latvia, Estonia and Lithuania. And what do they all have in common besides high growth?? Answer: A flat rate of Tax.

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