WORRYWARTS who just hate the idea of government spending on anything at all will look at today’s borrowing figures and see gloom.
The deficit is falling they will have to concede, but the cost of servicing the debt is rising sharply which must surely end in disaster. (Some of those interest payments on debt go back to the Bank of England of course, but we will leave that for now.)
Perhaps we should ask why governments run deficits in the first place.
The most compelling reason is to create a surplus somewhere else -- every pound of government deficit is a pound in cash to households and businesses.
So the worrywart view – that government borrowing is bad and private sector profit is good, as if one had nothing to do with the other, is simply wrong.
Today Next said sales are soaring and that profits will again smash City forecasts.
That’s a lot to do with having probably the smartest chief executive in town, Simon Wolfson, but also a function of people having more money in their pocket and more confidence to spend it.
This isn’t to say that the deficit isn’t big, it obviously is, the question is whether it makes sense to try and cut it faster than it will naturally fall as the economy recovers.
Chancellor Rishi Sunak might feel the need to raise taxes and lower borrowing, but that’s a political decision not an economic one. The deficit is falling anyway.
Sunak has had a brilliant crisis. It is a shame that he seems to hate the reasons why.