Ramesh Patel writes:
"A lie gets halfway around the world before the truth has a chance to
get its pants on"
- Winston Churchill
- Winston Churchill
As a Conservative I have no pleasure in exposing David Cameron's deficit
claims. However, as long as the party continues to talk down the economy via
the blame game, confidence will not be given an opportunity to return. For it
is an undeniable and inescapable economic fact: without confidence and
certainty there can be no real growth.
Below are the three deficit claims - the mess. The evidence comes from the
IMF, OECD, OBR, HM Treasury, ONS and even George Osborne. The claims put into
context are:
CLAIM 1
The last government left the biggest debt in the developed world.
After continuously stating the UK had the biggest debt in the world George
Osborne admits to the Treasury Select Committee that he did not know the UK had
the lowest debt in the G7? Watch: Also, confirmed by the OECD Those who use cash terms (instead of percentages) do
so to scare, mislead and give half the story.
Its common sense, in cash terms a millionaire's debt would be greater than
most people. Therefore, the UK would have a higher debt and deficit than most
countries because, we are the sixth largest economy. Hence, its laughable to
compare UK's debt and deficit with Tuvalu's who only have a GDP/Income of £24
million whilst, the UK's income is £1.7 Trillion.
Finally, Labour in 1997 inherited a debt of 42% of GDP. By the start of the
global banking crises 2008 the debt had fallen to 35% - a near 22% reduction
page 6 ONS
Surprisingly, a debt of 42% was not seen as a major problem and yet at 35% the
sky was falling down?
CLAIM 2
Labour created the biggest deficit in the developed world by overspending.
Firstly, the much banded about 2010 deficit of over 11% is false. This is
the PSNB (total borrowings) and not the actual budget deficit which was -7.7% -
OBR Economic and Fiscal Outlook March 2012 page 19 table
1.2
Secondly, in 1997 Labour inherited a deficit of 3.9% of GDP (not a balanced
budget ) and by 2008 it had fallen to 2.1% - a reduction of a near 50% -
Impressive! Hence, it's implausible and ludicrous to claim there was
overspending. The deficit was then exacerbated by the global banking crises
after 2008. See HM Treasury.
Note, the 1994 deficit of near 8% haaaaaah!
Thirdly, the IMF have also concluded the same. They reveal the UK
experienced an increase in the deficit as result of a large loss in output/GDP
caused by the global banking crisis and not even as result of the bank
bailouts, fiscal stimulus and bringing forward of capital spending. It's basic
economics: when output falls the deficit increases.
Finally, the large loss in output occurred because the UK like the US have
the biggest financial centres and as this was a global banking crises we
suffered the most. Hence, the UK had the 2nd highest deficit in the G7 (Not The
World) after the US and not as a result of overspending prior to and after
2008- as the IMF concur.
CLAIM 3
Our borrowing costs are low because the markets have confidence in George
Osborne's austerity plan and without it the UK will end up like Greece.
Yes, the markets have confidence in our austerity plan and that's why PIMCO
the worlds largest bond holder have been warning against buying UK debt.
The real reason why our borrowing costs have fallen and remained low since
2008 is because, savings have increased. As a result, the demand and price for
bonds have increased and as there is inverse relationship between the price of
bonds and its yield (interest rate) the rates have fallen. Also, the markets
expect the economy to remain stagnate. Which means the price for bonds will
remain high and hence, our borrowing costs will also remain low.
Secondly, the UK is considered a safe heaven because, investors are
reassured the Bank of England will buy up bonds in an event of any sell off -
which increases the price of bonds and reduces the effective rate. Note, how
rates fell across the EU recently when the ECB announced its bond buying
program. Thirdly, because, we are not in the Euro we can devalue our currency
to increase exports. Moreover, UK bonds are attractive because, we haven't
defaulted on its debt for over 300 years.
David Cameron would like people to believe the markets lend in the same way
as retail banks lend to you and I.
Overall, when the facts and figures are put into context these juvenile
deficit narratives and sound bites ("mere words and no evidence")
simply fail to stand up to the actual facts. The deficit myth is the grosses
lie ever enforced upon the people and it has been sold by exploiting people's
economic illiteracy.
So, David Cameron when are you going to apologise?
Cameron is playing the blame game to depress confidence and growth to
justify austerity. Secondly, to use austerity as justification for a smaller
state to gain lower taxes. Thirdly, to paint Labour as a party that can not be
trusted with the country's finances again. Therefore, we Conservatives will win
a second term because, people vote out of fear. The latter strategy worked the
last time in office (18 years) and will work again because, in the end,
elections are won and lost on economic credibility. Hence, as people believe
Labour created the mess they won't be trusted again.
Finally, as the truth is the greatest enemy of the a lie I urge you to share
this on Facebook, Twitter, blogs, text and email etc etc. So the truth can be
discovered by all. Finally, have no doubt, people have been mislead by the use
of the following strategy:
"If you tell a lie big enough and keep repeating it, people will
eventually come to believe it" Joseph Goebbels
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