Part of the reason why the national debt has become an issue is because of the financial crisis of 2007–08, which had dramatic implications for the UK. It is also partly because of problems related to the national debt in countries such as Greece. In this column we will attempt to separate the facts from the myths surrounding national debt and assess the extent to which it presents a genuine problem for the UK.
The first stage in our discussion is to make a distinction between the national debt and the government’s budget deficit. In a party political broadcast in 2013, Prime Minister David Cameron claimed that the government was ‘paying down Britain’s debts’. Commentators at the time pointed out that this was incorrect (see http://tinyurl.com/amtqfra for the BBC report). What he should have said was that the government was reducing the size of the budget deficit. Reducing the size of the debt would have required more drastic cuts in spending than were considered feasible, even by a government committed to an ‘austerity’ programme.
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