Wednesday, 22 April 2009


Watching the BBC coverage at lunchtime of the Chancellors budget my over-riding emotion was sheer incredulity at the size of the numbers quoted. Government debt to be funded by gilts and bonds will top £220 billion. I doubt I can really grasp what that number means, other than in terms of its relativity to previous levels of debt, and in that regard it is simply huge. All those zeros at the end of a few digits probably diminish the meaning for most people, but what is pretty clear is that it will take many years for the UKs ratio of debt to GDP to return to levels previously regarded as "prudent" and of course politicians will be focused on their own recipes for recovery. In a week where a ratings agency has reacted very aggressively to some rated building societies I wonder how well-protected the AAA rating of UK PLC is right now. Any threat to the reputation of our economy as worthy of investment will be very damaging, and not just for the government in its efforts to offlload all those gilts and bonds.

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